Target Cutting Prices In NJ, Citing Too Much Inventory

NEW JERSEY — New Jersey shoppers could soon see reduced prices at Target stores. The corporation cited an overabundance in its inventory, signifying a potential shift in the retail economy amid instability in the global supply chain that produced barren shelves for much of the pandemic.

Target's profits for the fiscal first quarter fell 52 percent compared to the same period last year. In the second quarter, the company plans to cancel orders from suppliers, create additional markdowns and remove excess inventory, the Target Corporation announced Tuesday.

It's not immediately clear how much Target will reduce prices. But the retailer cited success with food and beverage, household essentials and beauty products, while saying it would "plan more conservatively in discretionary categories like Home, where trends have changed rapidly since the beginning of the year."

Customers have gravitated toward spending more on services and necessities, leaving stores such as Target with backlogs of furniture and home electronics, according to the Star Tribune. Target's efforts to get rid of such products could result in deals on items such as TVs, furniture and kitchen appliances — products that were more popular during the height of the pandemic, when many had to spend more time at home.

Major retailers such as Macy's, Kohl's and Walmart also noted rising inventories when they reported quarterly earnings last month. Walmart said Friday at its annual shareholders' meeting that 20 percent of its elevated inventory included items the company wished it never had.

Target also plans to secure additional space near U.S. ports to hold merchandise and allow for greater flexibility and work with suppliers to shorten distances and lead times in the supply chain. The company will add five distribution centers in the next two fiscal years.

"Target’s business continues to generate healthy increases in traffic and sales, despite sustained volatility in the macro environment, including shifting consumer buying patterns and rapidly changing operating conditions," said Target CEO Brian Cornell. "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."

Turbulence in the global supply chain hasn't disappeared, and further economic woes could lie ahead. The World Bank joined the chorus of speculation Tuesday that a potential recession may be likely.

COVID-19 continues to hamper the global economy, even as more countries move beyond blanket restrictions. The international supply chain remains in tatters, while food and gas prices continue to rise, according to The World Bank's report. Russia's invasion of Ukraine and a rapid rise in prices prompted the Federal Reserve to hike interest rates by the steepest increment since 2000 in efforts to curb inflation.