THE WHAT? Target has announced its results for the second quarter of fiscal 2022. The US retailer said that despite continued sales and traffic growth, profit was under pressure, driven by the company’s inventory reduction efforts.
THE DETAILS Comparable sales grew 2.6 percent in the three months, with revenue hitting US$26 billion, up 3.5 percent on the prior-year period. The second quarter operating income margin rate was 1.2 percent, compared to 9.8 percent a year ago and gross margin rate stood at 21.5 percent versus 2021’s 30.4 percent, reflecting higher markdown rates, driven by inventory impairments and higher merchandise, inventory shrink and freight costs.
THE WHY? Brian Cornell, Chairman and Chief Executive Officer of Target Corporation, commented, “I’m really pleased with the underlying performance of our business, which continues to grow traffic and sales while delivering broad-based unit-share gains in a very challenging environment. I want to thank our team for their tireless work to deliver on the inventory rightsizing goals we announced in June. While these inventory actions put significant pressure on our near-term profitability, we’re confident this was the right long-term decision in support of our guests, our team and our business. Looking ahead, the team is energized and ready to serve our guests in the back half of the year, with a safe, clean, uncluttered shopping experience, compelling value across every category, and a fresh assortment to serve our guests’ wants and needs.”