Target saw transactions increase by more than 20% from 2019 during Q2 — but the company’s costs ate away at its margins, its CEO says.
Why it matters:
Target's performance in the second quarter shows just how hard it’s been for the average retailer to operate during the pandemic. The swift economic recovery from the pandemic gave companies little time and room to adjust first to logistics challenges and more recently to changing consumer preferences.The retailer pursued aggressive markdowns on discretionary or nice-to-have products like clothing, home decor and electronics — all of which have piled up as consumer spending on services ramped up.
Inventory in the second quarter was $6 billion higher than it was three years ago due to higher costs and getting holiday inventories earlier in advance of the fall and holiday seasons, the company said on the earnings call.We could have avoided short term pain on the profit line, but that would have hampered our longer term potential," CFO Michael Fiddelke said on the call.
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