Back to top
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Amazon.com, Inc. (AMZN) - free report >>
Target Corporation (TGT) - free report >>
We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Amazon.com, Inc. (AMZN) - free report >>
Target Corporation (TGT) - free report >>
Image: Bigstock
Target (TGT) Looks to Suppliers to Help with Unsold Inventory
A sluggish top-line performance has compelled Target Corp. (TGT - Free Report) to ask suppliers to bear a certain percentage of price cuts and promotional expenditures, per Reuters. This development is not much of a surprise given the general merchandise retailer’s first-quarter fiscal 2016 results, wherein its net sales fell short of the Zacks Consensus Estimate for the third consecutive quarter. Moreover, we observe that total sales dropped 5.4% year over year following a decline of 0.6% in the final quarter of fiscal 2015.
Companies generally provide discounts and other offers on slow-moving products to lure customers in order to clear out inventory. This helps create shelf space for newer items. Target is seeking help from suppliers to bear some extra costs related to the marketing and selling of slow-moving products.
Suppliers also provide certain offers on their items and reach an agreement with companies over how to divide the promotional budget. Target now aims to lower the impact of markdowns on margins as consumers are still wary when it comes to discretionary items.
Analysts believe that Target intends to put money and effort toward promoting products that are in demand to boost its sales. Moreover, in order to withstand competitive pressure from both brick and mortar and online retailers, such as Wal-Mart Stores Inc. (WMT - Free Report) and Amazon.com, Inc. (AMZN - Free Report) , Target has become more stringent about delivery timings. The company may even impose fines on late deliveries, and slap penalties of up to $10,000 for any incomplete or inaccurate information on products.
The steps being taken are seen as part of the company’s efforts to enhance its supply chain operations, equip its outlets with new season products, streamline eCommerce operations, control cost and maximize sales via more higher-margin carrying products.
Currently, Target carries a Zacks Rank #3 (Hold). A better-ranked stock in the space is Burlington Stores, Inc. (BURL - Free Report) , holding a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>