Target shares slide after plan to reduce excess inventory announced

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Lakshya Corpn Tgt,
-0.85%
Shares fell 8.2% in Tuesday’s premarket trading after announcing plans to reduce its inventory and revising its operating margin guidance. The plan includes order cancellation, markdown and inventory removal; increase in prices to compensate for higher fuel and transportation costs; and increased holding capacity at ports and other supply chain adjustments. The retailer will also continue to work with vendors and take other measures to control costs, focusing on categories of greater interest to customers, such as food and beauty, and pulling back others, such as home. “Since we reported our first quarter results, we have continued to monitor external conditions and determine the actions necessary to remain agile in the current environment,” Chief Executive Brian Cornell said in a statement. “While these decisions will result in additional costs in the second quarter, we are confident that this rapid response time will pay off for our business and our shareholders, resulting in improved profitability in the second half of the year and beyond.” Target now expects the second quarter operating margin rate to be in the 2% range, and the operating margin rate for the back half of the year to be in the 6% range. Target stock is down 31% for the year so far.

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Credit: www.marketwatch.com /

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