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Target Execs Feeling Good About Rising Inventory Levels


Department stores drowned under winter stock during the unseasonably warm third quarter, but Target hasn’t bemoaned its high inventory levels.

According to The Wall Street Journal, the Minneapolis-based retailer increased its in-stock position by as much as 50 percent for many “fast turning” items in order to reduce out-of-stocks—a problem that chief operating officer John Mulligan said had been hurting sales growth.

The result: a 4 percent increase in inventory in the three months ended Sept. 30, which Target said led to a 1.9% rise in sales at stores open at least a year. The retailer reported sales of $17.6 billion, up 2.1% from over the prior year’s third quarter.

“In a very short-time, the results of our efforts have been encouraging,” Mulligan told the Journal.

With that being said, comp-store sales growth and traffic was less than reported in the second quarter and the mass-market retailer is looking for ways new ways to diversify in an increasingly unpredictable environment.

Earlier this month, Target announced plans to open one of its flexible-format stores in Manhattan’s Tribeca neighborhood in October 2016. The smaller store—which is set to be stocked with a selection of groceries, apparel and home goods—will be about one-third of the size of the retailer’s traditional locations. It currently operates 18 such stores around the U.S.

But while inventory build-up at Macy’s means slow sales, Target’s chief financial officer, Cathy Smith, said more stock is a sign that new strategies are working.

As she told the Journal, “We feel very good about our inventory position going into the holiday season in relation to both our sales planned and our work to improve in-stock reliability.”