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Target’s inventory levels increased faster than sales in the third quarter, but the retail giant reassured shareholders in its latest earnings call that it’s employing new metrics to balance inventory across in-store and digital channels.
- Inventories were up 3% YoY compared to a 0.3% increase in comp sales, due to “softer than expected sales in discretionary categories,” CEO Brian Cornell explained, which has led to “higher than expected costs in our supply chain.”
Chief Operating Officer Michael Fiddelke, who was hired at the beginning of 2024 to oversee the company’s global supply chain, said Target uses a metric it calls “purchasability” to “protect our guests’ in-store and digital shopping experience.”
He provided an example: If a product is running low, Target may make it unavailable for same-day fulfillment. That way it remains in-stock at its brick-and-mortar stores. In other words, that product is no longer purchasable in a given channel, a situation Target is trying to avoid as much as possible.
“The team has been working hard to reduce the number of times this happens, and we're encouraged that consistent with our in-stock trends, we’ve significantly improved our purchasability metrics year over year,” he said.
The purchasability metric is meant to supplement in-stock measures, which Fiddelke said might not offer “enough depth to support the combination of in-store and digital demand.”
Looking ahead, Fiddelke said “we’re committed to ending the year clean from an inventory perspective.”