Inflation is breaking records — and retailers’ forecasts.
Consumer behavior has shifted so swiftly since the beginning of the year that major retailers are faced with clearing excess inventory and recalculating financial expectations as prices continue to rise. Target is a case in point.
In June, the retailer released an update warning of lower profit margins as purchase patterns shifted and inventory had to be right-sized. Inflation drove high expectations for Target’s “frequency categories” including food, beauty and household essentials, but more conservative estimates on discretionary categories like home, “where trends have changed rapidly since the beginning of the year.”
Target’s pronouncement turned out to be the first of many. In the span of just a few days in July, multiple major retailers cut guidance as demand for apparel, electronics and other nonessential goods comes under pressure. While multiple factors are at play, inflation is so far a common denominator for the industry’s lower projections. And if Target is any indication, there could be more adjustments to come.
Below are some of the major retailers that have cut their quarterly or annual outlook in recent weeks. And why.