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Target Corporation (NYSE:TGT) and a number of peers are continuing promotional activity post-holiday as the retailers attempt to tame inventory levels.
The new promotional event for Target, entitled the “Target Clearance Run”, includes up to 50% discounts across numerous categories and a number of by one, get one deals. Grocery items are also subject to flat dollar amount discounts.
“Our guests always look forward to post-holiday deals, whether they’re looking to spend the gift cards they received as a holiday gift, restock their pantries after hosting for the holidays or prepare for a New Year’s celebration. ‘The Target Clearance Run’ is the perfect moment to do just that,” said Christina Hennington, executive vice president and chief growth officer. “With deals across clothing, toys, home, food and beverage and more, this is a chance for guests to take advantage of discounts throughout our incredible assortment.”
Target has struggled with its inventory management for much of 2022, but it has been far from alone in seeing well above-average merchandise levels. Walmart (WMT) also took a big hit in May when it forecast lower profits amid promotional activity, for example. While the Arkansas-based retail giant has managed inventory better than its Minnesota-based competitor in Target, it too is pursuing After Christmas sales to lean out its merchandise levels.
Within apparel retail specifically, the promotional trend was even more pronounced with Nike (NKE), Adidas (OTCQX:ADDYY), Foot Locker (FL), Capri Holdings (CPRI), and Urban Outfitters (URBN) each pursuing aggressive markdowns to clear inventory. Even discounters like Burlington Stores (BURL) and Ross Stores (ROST), which typically benefit from dislocated inventories, saw merchandise on hand spike year over year to bloated levels.
As such, Nike (NKE) is joining Target in offering a post-holiday sale extending into January, while Amazon (AMZN), Levi Strauss (LEVI), Nordstrom (JWN), Abercrombie & Fitch (ANF), and Wolverine World Wide (WWW) are all joining in promotion activity into the new year. Even Lululemon Athletica (LULU), a retailer reticent to offer discounts, is offering deals into the year-end after inventories rose nearly 90% from lean 2021 levels in its recent quarterly report.
As a last-minute surge in holiday sales was hampered by inclement weather and tighter spending habits among consumers, according to Wells Fargo, retailers appear eager to extend discount offers. The success of these sales promotions into January are likely to be pivotal to starting 2023 with appropriate inventory levels across the space.
Read Lululemon’s latest earnings call transcript.
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