1 Chart Explains Target's Inventory Trouble
If you're reading this, then you likely already know retailer Target (NYSE: TGT) is counting on profit problems for the quarter currently underway. Namely, operating margin rates for the second fiscal quarter should slip to somewhere near 2%, down from an estimate of around 5.3% less than a month ago. The company's warning explains that "additional [merchandise] markdowns, removing excess inventory and canceling orders" will be among several contributing factors behind the brewing profit pinch. It's also planning on holding more merchandise at shipping ports that would otherwise be on its way to its stores.
Read between the lines. Target is sitting on too much in-store inventory, perhaps buying too aggressively in anticipation of a booming post-pandemic consumerism recovery.
What the company didn't detail, however, was the degree of its current inventory headache. One simple image puts everything in perspective.
Source Fool.com
