Profits in the second fiscal quarter for the Target department store chain have massively fallen in the 90- percent range, and Bidenflation evidently is part of the reason.
The Minneapolis-headquartered big box retailer also found itself implementing significant markdowns to move more merchandise to consumers, a decision that cut into its profit margin.
“Target reported solid sales for the fiscal second quarter but its profit plunged nearly 90% after it was forced to slash prices to clear unwanted inventories of clothing, home goods and electronics. In early June, Target warned that it was canceling orders from suppliers and aggressively cutting prices because of a pronounced spending shift by Americans as the pandemic eased,” the Associated Press reported on Wednesday.
“Retailers were blindsided by the lightening-fast switch from spending on goods for the home, like TVs and small kitchen appliances, to dinners out, movies and travel. Adding to that shift is surging inflation. In the first quarter, Target’s profits tumbled 52% compared to the year-ago period,” AP recalled.
On a conference call with the financial media, Target executive VP Christina Hennington said that customers “still have spending power, but they’re increasingly feeling the impact of inflation, and while the recent reduction in prices at the gas pump have been encouraging, guest confidence in their personal finances continues to wane.”
According to Michael Fiddelke, Target’s chief financial officer, “If we hadn’t dealt with our excess inventory head on, we could have avoided some short-term pain on the profit line, but that would have hampered our longer-term potential. While our quarterly profit took a meaningful step down, our future path is brighter,” CNBC reported.
The company reported $183 million of net income in the second quarter, a significant year-over-year downturn from $1.8 billion. Sales increased, however, from about $25 billion to $26 billion during the same time frame.
Progressive fail: Target closing San Fran stores early due to 'alarming rise in theft' https://t.co/YZPpebwa39
— Jack Furnari (@JackBPR) July 4, 2021
Walmart apparently had a more favorable quarter, Forbes explained: “Target’s rival Walmart announced better than expected earnings for the second quarter and reported a net income of $5.15 billion, up 20% compared to the same period last year. In its earnings call Walmart said it had made ‘good progress’ in thinning out its excess inventory and has managed to clear ‘most summer seasonal inventory.'”
Walmart perhaps has a more advantageous product line than some of its marketplace rivals. “Walmart beat earnings estimates as it drew more shoppers to its stores for bargains on groceries and essential items,” the Daily Mail asserted.
Target “expects its operating margin to improve to about 6% for the second half of the year,” Forbes added.
Although financial data is subject to much interpretation, here is what some social media users are thinking about this development.
What's shocking about Target's 90% drop in profits June 2021 vs. June 2022 is that in June 2021 we were in the worst Covid surge so far, yet economically we are far worse off now. It shows the devastating impact Biden printing $4 trillion in 18 months had https://t.co/CkZOKiPbF3
— Tara Servatius (@TaraServatius) August 17, 2022
CNBC: Target profits are down 90% from a year ago.
Let’s put this all in perspective. No spin. It’s a disaster.
— QE Infinity (@StealthQE4) August 17, 2022
Target’s profits have dropped 90% since last year. Thank Biden we’re not in a recession 🤣😂
— Raybert76 (@raybert761) August 18, 2022
All the smash and grabs had an effect but they probably won’t bother to mention that.
— calamityjane aka anonymous (@janveirsixx) August 17, 2022
Target Stores announced profits down 90%.
Go woke, go broke?
— Arithia (@Arithia3) August 17, 2022
Target profits plummet 90%! Thanks Joe Biden.
— Jillian (@Jillian22Betsy) August 18, 2022
Watch a report about Target aired by CNBC on Wednesday:
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