Target Takes Steps To 'Right Size' Inventory

Facing continuing supply chain issues, Target is taking steps to “right-size” its inventory for the remainder of 2022 that includes canceling orders and removing excess inventory. 

Additionally, the move by the Minneapolis-based retailer includes the addition of incremental holding capacity near key U.S. ports. Company officials said this decision will add flexibility and speed in parts of the supply chain most affected by “external volatility.”

Target chairman and CEO Brian Cornell said the retailer in recent weeks has continued to monitor external conditions and determined the necessary actions to remain nimble in the current environment.

“The additional steps we are announcing will ensure that we deliver for our guests while driving further growth,” he said. “While these decisions will result in additional costs in the second quarter, we’re confident this rapid response will pay off for our business and our shareholders over time, resulting in improved profitability in the second half of the year and beyond.”

Target is also accelerating work that’s already in place, including revisions to sales forecasts, promotional plans and cost expectations by category. Specifically, the company is planning for continued strength in frequency categories like food & beverage, household essentials and beauty, and is planning more conservatively in discretionary categories like home, where trends have changed rapidly since the beginning of the year. 

Target is also reviewing options to control costs, including ongoing work with vendors to help offset inflationary pressures, driving continued operating efficiencies and reducing costs while preserving a strong guest experience. The retailer is also building additional capacity in its upstream supply chain to support its future growth by adding five distribution centers over the next two fiscal years