Target says it’s cutting prices to reduce inventory glut

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Target Corp. TGT, -0.85% shares slid 8.2% in Tuesday premarket trading after it announced a plan to reduce its inventory and revised its operating margin guidance. The plan includes canceling orders, markdowns, and removing inventory; price hikes to offset higher fuel and transportation costs; and increased holding capacity at the ports and other supply chain adjustments. The retailer will also continue to work with vendors and take other measures to control costs, and focus on categories of greater interest to customers, like food and beauty, and pull back on others like home. “Since we reported our first quarter results, we have continued to monitor external conditions and have determined the necessary actions to remain nimble in the current environment,” said Chief Executive Brian Cornell in a statement. “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 now expects the second-quarter operating margin rate will be in the 2% range, and an operating margin rate in the range of 6% for the back half of the year. Target stock has slumped 31% for the year to date.

This article was originally published by Marketwatch.com. Read the original article here.

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