Costco Wholesale Corp (NASDAQ:COST) shares are trading lower alongside several retailers in sympathy with Target Corp (NYSE:TGT), which announced an inventory optimization plan that will result in additional second-quarter costs.
Target is planning to take several actions in the second quarter, including additional markdowns, removing excess inventory and canceling orders.
The retailer also plans to take actions to reduce the impacts of supply chain constraints and rising inflation, which include the addition of incremental holding capacity near U.S. ports, working with suppliers to shorten distances and pricing actions to address unusually high transportation and fuel costs.
As a result of the optimization plan, Target now expects its second-quarter operating margin rate to be around 2%, however, it's expected to rise to around 6% during the second half of the year.
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Costco sells memberships that allow customers to shop in its warehouses, which feature low prices on a limited product assortment.
COST Price Action: Costco shares have a 52-week high of $612.27 and a 52-week low of $377.12.
The stock was down 3.17% at $457.50 at press time, according to data from Benzinga Pro.
Photo: Mike Mozart from Flickr.
