Welcome to the New Economy: Target Stock Drops 25% In a Day

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by Chris Black

It’s good that adults are back in charge. 

Welcome to Biden’s economy:

Maybe making 60-90% gross margin on discretionary products isn’t a valid business model after all.

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What, you didn’t know that clothing is an 80-90 point category? Toys and sporting goods is 55-70 points. Target and Walmart pay $3.80-4.25 for a $10 retail item. They can afford to cut their margins in half. 

People are always shocked at clearance prices when they see 70% off. 

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Guess what? The store is still making money. 

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What is killing retail is that the distributors can’t make money anymore. The bigger ones like Hasbro are still making double their money, by passing on massive price increases. 

A toy that was $10 ten years ago is now $25. The manufacturing cost didn’t go up 2.5x. 

The retailers could sell the products for a lot less and give consumers a break.

 But they refuse to because their inflated share prices are predicated on those expansive margins.


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