Target's stock price plummeted Tuesday after the retailer said its profits will take a hit this quarter as it ramps up discounts to cut back on rising inventory.
The retailer says it will cut back on orders to fight the supply chain.
Target stock fell 8% to less than $148 as markets opened Tuesday, pushing shares near their lowest point in nearly two years, after the company said it would take several actions in the second quarter to ease supply chain constraints.
The company expects the measures will hurt profitability this quarter, and it expects its operating margin to be 2%, far less than it expected for the back half of the year.
The plunge comes less than a month after the company reported earnings that fell well below expectations due in part to higher freight, transportation and inventory costs.
Walmart's share price fell 3% to $121 Tuesday morning.
Walmart and Target are included in the SPDR S&P RetailETF, which has lost more than the S&P 500 this year.
Retailers have reported that rising costs are starting to affect their profits. Walmart posted worse-than- expected earnings less than a week before Target. In a note, analyst Tom Essaye of the Sevens Report pointed out customers are buying less high-margin merchandise like apparel and electronics to instead spend more on lower-margin food like bread and eggs. Retailers have accumulated a lot of discretionary items that were popular in the past.
Target stock plunges as inflation squeezes customers and sends costs soaring.
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