Target Corporation has announced its updated 2022 plan, which the US retailer says is focused on right-sizing its inventory for the balance of the year and creating 'flexibility in serving guests in a rapidly changing environment'.
As part of its strategy, the company is planning to add incremental holding capacity close to U.S. ports, take pricing actions, remove excess inventory and cancel orders. It also aims to work with suppliers to shorten distances and lead times in the supply chain.
Target said it has been assessing the current industry performance, operating environment and consumer trends, all of which have influenced its strategy. It intends to work closely with vendors to help offset inflationary pressures to reduce costs.
Commenting, Brian Cornell, chairman and chief executive officer of Target Corporation said, "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.
"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. The additional steps we are announcing today will ensure that we deliver for our guests while driving further growth."
Target said that its second-quarter operating margin rate will come in around the 2% range. It expects an operating margin of around nearly 6% to exceed the company's average fall season performance in the years leading up to the pandemic.
"While the decisions will result in additional costs in the second quarter, we are confident the 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," Cornell added.