The retail giant was forced to rely on deep discounts to sell off excess inventory, which resulted in a fall in profits.
The profit of Target fell in the second quarter.
Even though Target's revenues rose slightly from $24.8 billion to $25.6 billion, the company's net earnings fell from $183 million to $183 million.
The steep drop off in profit has been attributed to Target's thin operating margin of 1.2% in the quarter, which is even lower than the company's previous forecast of 2%.
The operating margin is expected to improve in the second half of the year.
Brian Cornell acknowledged the short-term impact of Target's inventory disposal strategy but said it was the best thing for the long-term strength of the business.
Markets opened on Wednesday and Target's stock was down by over 4%.
Walmart reported a net income of $5.15 billion for the second quarter, up 20% from the same period a year ago. Walmart said in its earnings call that it had made progress in clearing excess inventory.
In a note sent out to the press, economists at Goldman Sachs said the liquidation of excess inventory by retailers at discount prices is likely to have a modest impact on consumer price inflation in the US
$13.45 billion. The total value of inventory held by Target is still higher than it was a year ago.
Walmart goes up 5% after solid earnings and progress in reducing inventory levels.
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