Americans have pivoted from pandemic spending, faster than some retailers expected. Target shares tumbled in pre-market trading.
Target on Tuesday said it is canceling orders from suppliers, particularly for home goods and clothing, and it’s slashing prices further to clear out amassed inventory ahead of the critical fall and holiday shopping seasons. The actions come after a pronounced spending shift by Americans from investments in their homes to money spent on travel, nights out for dinner and dressier clothes — a change that arrived much faster than major retailers anticipated. The speed at which Americans pivoted away from pandemic spending was laid bare in the most recent quarterly financial filings from a number of major retailers. Target reported last month its profit for the fiscal first quarter tumbled 52% compared with the same period last year. Sales of big TVs and small kitchen appliances that Americans loaded up on during the pandemic have faded, leaving Target with a bloated inventory that it said must be marked down to sell.
„This announcement is going to spook investors — especially the fact that it comes less than a month after Target reported earnings — and it probably should make people a bit nervous about Walmart and Kohl’s, but it seems like the issue is more company-specific than anything else“, Adam Crisafulli of Vital Knowledge said in a research note.
