Siddharth Cavale and Aishwarya Veugopal

(Reuters) – Target Analysts said Tuesday that Corp (NYSE: ) will likely shed excess inventory by August, which could hurt its profitability. The company is also expected to be in a position to make strong profits during key holiday and back-to school sales periods.

The retailer stated that it would quickly reduce the stock remaining unsold. According to analysts, this is mostly discretionary inventory like appliances and TVs which customers have avoided since inflation spiked in recent weeks.

Target is taking the margin cut now and acting quickly to eliminate excess inventory. It will position them better ahead of two of the most crucial retail selling seasons: back-to school and holiday,” stated Ken Perkins (founder of Retail Metrics), a research company.

This should not be considered a long-term issue.

The company cut Tuesday’s second-quarter operating margin forecast more than half to 2.3% from 5.3%. But it anticipates that the number will reach 6% during the second half.

Profitability was hurt by the inventory increase, which was up 43% year-over-year at the close of the first quarter.

Brian Cornell, Target’s CEO, said that the retailer is working to reduce excess stock by July 31, and would cancel certain orders to avoid “additional cost” in the next quarter.

Arun Sundaram, CFRA analyst, said that he thinks the company will get rid of excess inventory by then.

The retailer will be able to devote more shelves space to beauty and food products, which are a growing market.

Target has maintained its year-end sales forecast. Target store visits have increased since January, with their highest growth in April.

Although inflation rose, traffic rose 10% for the month of May. This is a 14.3% increase compared to previous years. Although the trend slowed in May, traffic was much higher than it was last year.

Target stock shares ended Tuesday down 2.4% due to strong foot traffic.

The fear of recession has been fuelled by the recent warnings about full-year profits from U.S. retailers Target and Walmart (NYSE:).

Analysts believe the companies are in a good position, due to their large product range, which includes eggs, kitchen appliances and other household goods, and because they have low prices that attract customers.

“Target’s visit metrics have remained strong even amid significant economic headwinds, a testament to the company’s powerful draw, wide product offering and focus on value for its key audience,” said Ethan Chernofksy, vice president of marketing at Placer.ai.