Target, a large U.S. retailer, issued a profit warning on June 7 and revised down its previously released profit forecast for the current quarter, causing the market to think that the United States will experience a recession, causing the stock price to plunge 2.3%, dragging down other retail stocks such as Walmart, Amazon (Amazon) shares also fell.

 

Reuters and other foreign media reported that on May 18, Target announced that its profit performance in the first quarter of the 2022 fiscal year was not as good as market expectations. Less than three weeks later, on June 7, Target announced that it lowered its profit outlook and expected operating profit in the second quarter. The operating margin was about 2 percent, down from an earlier estimate of 5.3 percent, as the company would cut purchases and offer discounts to clear inventory as inflation slows consumers from non-essential spending.

 

According to Target, as of the end of April 2022, inventory amounted to approximately US$15.1 billion, 43% higher than the same period last year, mainly due to the sharp decline in demand for high-margin non-essential items such as kitchen appliances and TVs.

 

In the past two years, retailers have been the biggest beneficiaries due to the massive distribution of coronavirus relief funds by the U.S. government, which has made consumers go shopping spree. But now, with the exit of the bailout plan, the consumption pattern of the American people has changed dramatically, buying less non-essential items and spending more money on necessities such as food and gasoline.

 

On the 7th, Target’s stock price fell 2.31% to close at $155.98. This year, it has fallen 32.60%, which is worse than the S&P 500’s decline of 12.70% over the same period.

 

Other heavyweight retail stocks including Amazon and Walmart also closed down 1.43% and 1.20%, respectively, in stark contrast to last quarter's strong gains.