TARGET DEADLINE ALERT

Bragar Eagel & Squire, P.C. Reminds Investors that a Class Action Lawsuit Has Been Filed Against Target Corporation and Encourages Investors to Contact the Firm - Seite 2

At the same time Target announced its early purchasing strategy, Defendants stated during the August 18, 2021, earnings call that consumer shopping preferences continued to shift. For example, while demand for home and hardline products—two of Target’s core product categories—skyrocketed in 2020, the Company was now noticing a softening in demand for those products. Nevertheless, Target falsely assured investors that its “unique multi-category assortment” enabled the Company “to flex between patterns in consumer behavior changes,” and that its inventory “perfectly positioned [Target] to serve our guests’ evolving wants and needs.”

As recently as March 1, 2022, Defendants continued to boast about Target’s “balanced” assortment and how the Company was “leveraging guest insights to enhance our assortment” and adapt to the rapidly changing consumer trends.

However, contrary to Defendants’ statements touting the flexibility of Target’s purported “durable” business model and “balanced assortment,” Defendants were aware that the Target’s strategy of buying early had resulted in the Company over-purchasing goods that were no longer in demand. As early as August 2021, Target’s “multi-category” inventory became out-off-balance and overweight in home and hardline products — “bigger, bulkier products like furniture, TVs, and more” — due to waning demand. Target’s assortment problem only continued to grow throughout the Class Period as consumers began to “refocus[] their spending” away from home and hardline goods and into experiences.

By May 18, 2022, Defendants would admit when reporting on results for the first quarter of 2022 that contrary to their public statements, Target’s “durable, flexible strategy” was thwarted by its practice of ordering inventory before it was needed, resulting in overstocked, unsellable inventory taking up valuable store shelf space and leaving Target unable to quickly pivot to meet changing consumer preferences as represented. This resulted in Target’s inventory increasing by nearly $1.1 billion over the previous quarter and overweight in “bigger, bulkier” hardline and home products that the Company was now forced to markdown to “make room for fast-growing categories.” As a result, Target’s revenue and gross margin declined nearly 19% and 4.3%, respectively, for the quarter, and Defendants stated they expected the excess inventory to negatively affect earnings into the next quarter.