Here Comes the Boom

CNBC: Target expects squeezed profits from aggressive plan to get rid of unwanted inventory

Target said it will take a short-term hit to profits as it cancels orders and marks down unwanted merchandise.

Target anticipates its operating margin rate for the second quarter will be around 2%. That’s lower than the outlook it gave less than three weeks ago.

Target anticipates its operating margin rate for the second quarter will be around 2%. That’s lower than the outlook it gave less than three weeks ago.

Target said it had nearly $15.1 billion of inventory as of April 30, the end of the fiscal first quarter. That’s about 43% higher than in the year-ago period.

Everyone rushed to buy goods for an economy that was long gone by the time the goods arrived. Now they think they are ordering the right goods for the economy now, but their supply chains are still snarled. What's to say the economy won't change yet again by the time the new inventory shows up?

Back in early April, I posted Wall Street Ignores Margin Collapse Warning. The Restoration Hardware CEO warned everyone what was coming. The market still doesn't understand the level of destruction underway though, because they think there's some magic "print money" button that can be pressed. All around us is evidence of what happens when that button is pushed. Remember too all the talk about the great economy, reopening, consumer spending. The booming 2020s. It was mostly inflation.

Today's Losers

A lot of moves to support areas.