Yes, the company wasn’t prepared either for cost inflation that hurt their profitability.
Curiously enough, neither were the investors, after all – they expected Target to sail well through this inflation!
However, such drops are predictable and statistically inevitable.
Look at this eye-opening chart of Target profitability (their operating margins) – being at the PEAK already!!
So, when you are at the cyclical peak, there is only one way – DOWN, when you are at the peak something bad always happens – inflation, sales slowdown, or a new competitor entering your lucrative franchise…