With a huge inventory, Target cuts orders, prices

Retailers’ quarterly reports show Americans have slowed spending

NEW YORK — Target is canceling orders, particularly for home goods and clothing, and slashing prices to clear out inventory ahead of the critical fall and holiday shopping seasons.

The actions, announced Tuesday, come after a pronounced spending shift by Americans from investments in their homes to spending on such experiences as travel, nights out and other pre-pandemic routines. Shoppers are also focusing on such non-discretionary items as groceries as inflation makes them more selective. That’s a change that happened much faster than major retailers had anticipated.

The speed at which Americans pivoted away from pandemic spending was laid bare in the most recent quarterly financial filings from a number of major retailers. Target reported last month its profit for the fiscal first quarter tumbled 52% compared with the same period last year. Sales of big TVs and small kitchen appliances have faded, leaving it with a bloated inventory that it said must be marked down to sell.

Other retailers, including Macy’s, Kohl’s and Walmart, cited rising inventories when reporting quarterly earnings results last month. Walmart said at its annual shareholders’ meeting Friday that 20% of its elevated inventory were items the company wishes it never had.

Target declined to give a dollar amount of orders that are being canceled or the depths of discounts.

In aggressively clearing out unwanted goods, Target wants to make room for what is now in demand. But the retailer is also facing sharply higher costs for everything from labor to shipping, and will offset price cuts with higher prices for goods now in demand where it can.