Target announced on June 7 that it will be taking steps to downsize inventory, which will include additional markdowns some on already heavily discounted clearance rack items.
Walmart inventory full#
Also to its credit, by the middle of this year, it was willing to discount the merchandise it knew it would struggle to sell at full price, figuring it was better to take some lumps early than to let goods age on store shelves. Company leaders for both Target and Walmart have recently discussed their issue. To its credit, Walmart boldly procured fresh inventory late last year and early this year, responding to what it thought would be brisk demand coming out of the pandemic. Profit margins are typically paper thin in this business (Walmart's net profit margins were a scant 3.4% of revenue last quarter), so even the slightest misstep on the merchandise front can take a serious toll on the bottom line. One of the more important but underappreciated aspects of retailing is having the right merchandise in the right place at the right time at the right price. Stock levels are still uncomfortably high, particularly now that we're headed into cooler weather and the holiday shopping season. earned 5.15 billion, beating Wall Streets expectations and topping last years profit of 4.27 billion. Well, if you think the world's biggest retailer got rid of as much inventory as it would have liked to, however, think again. Specifically, CEO Doug McMillon explained during May's quarterly earnings call that the store chain intended to "work through most or all of the excess inventory over the next couple of quarters" but also warned that "we expect some gross margin pressure in Q2." And investors did get a slight taste of those markdowns for the recently ended quarter, but only a slight one. Three months ago, Walmart ( WMT -0.20%) shareholders were led to believe the company would be able to pare back its then-sky-high inventory levels, even if it took a bit of a toll.