Target Corp TGT shares are trading lower Tuesday after the company announced an inventory optimization plan, which will result in additional second-quarter costs.
The retailer is planning to take several actions in the second quarter, including additional markdowns, removing excess inventory and canceling orders.
Target also plans to take actions to reduce the impacts of supply chain constraints and rising inflation, which include the addition of incremental holding capacity near U.S. ports, working with suppliers to shorten distances and pricing actions to address unusually high transportation and fuel costs.
Target said it continues to build additional capacity in its supply chain to support its future growth with plans to add five distribution centers over the next two fiscal years.
Guidance Update: As a result of the optimization plan, Target now expects its second-quarter operating margin rate to be around 2%. It's expected to rise to around 6% during the second half of the year.
The company continues to expect full-year revenue growth in the low- to mid-single digit range, and expects to maintain or gain market share in 2022.
TGT Price Action: Target shares have traded between $145.51 and $268.98 over a 52-week period.
The stock was down 8.94% at $145.35 at press time, according to data from Benzinga Pro.
Photo: courtesy of Target.
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