Retail Stocks Fell in Morning Trading, Target Stock Tumbled 5%.
Home Depot, Wal-Mart, Costco, Target, Kroger, Best Buy, Nordstrom and Dollar Tree fell between 1% and 4%.
Target Corporation (NYSE:TGT) announced a set of actions to "right-size" its inventory for the balance of the year and create additional flexibility. The retailer expects to take additional markdowns to remove excess inventory and cancel orders. The TGT action plan also includes the addition of incremental holding capacity near U.S. ports to add flexibility and speed in the portions of the supply chain most affected by external volatility.
Pricing actions to address the impact of unusually high transportation and fuel costs are also planned. Target (TGT) also said it will work with suppliers to shorten distances and lead times in the supply chain.
On the financial front, Target (TGT) now sees operating margin rate falling to a range of around 2.0% for Q2 vs. 6.5% consensus before jumping back to around 6.0% for the back half of the year. TGT continues to expect full-year revenue growth in the low- to mid-single digit range.