Target CEO: Supply-chain bottlenecks won't be resolved overnight
Target CEO Brian Cornell said the discounter is well-prepared in the lead-up to the holiday shopping season to navigate the supply-chain challenges weighing on retailers and manufacturers of all kinds.
All it took was very, very careful forward planning.
"We have become much more agile. We have taken the steps we have had to take," Cornell said at Yahoo Finance's All Markets Summit.
For its part, Target ended the second quarter with inventory up $2.5 billion, compared to a year ago as it brought in merchandise early to ensure against products being out of stock. The company has also chartered its own cargo ship to keep goods flowing to its 1,900 stores and distribution centers.
Despite the increased efforts, Cornell concedes that supply-chain challenges will be around for some time.
"I think we have been seeing supply-chain challenges throughout the pandemic. Whether that is closures in Asia or the slowdown of ports, the challenges with driver shortages in the United States. I don't think these issues are resolved overnight. Obviously we are very focused on making sure we play our role and move through the system. We are currently hiring 30,000 additional team members in our supply-chain system. I think this is going to take quite a bit of time to sort out," Cornell added.
Target and rival Walmart are receiving high marks on Wall Street for their careful supply-chain planning. It also helps that both are heavyweights in the retail space that command much of the attention of key vendors.
"Walmart and Target entered 3Q with strong inventory positions. Both retailers should benefit from more favorable port access, long-term container shipping agreements and chartered vessel capacity. Walmart and Target should gain share from smaller competitors this holiday that lack scale and face more shortages due to the challenging supply chain environment," said Bank of America analyst Robbie Ohmes.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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