TRG | The Bottom Line – 6/10

What does a peak look like? The Nashville Hot Chicken craze has crossed the pond, as seen last week by this food stand along London’s River Thames. Among peaks in the market and as seen in earnings releases this week is the acknowledged need to reduce inventories for certain goods. There remains a distinct shift from “just in time” to “just in case” from an inventory stocking standpoint. That said, too much inventory has already become an issue as consumer demand has cooled in response to rampant inflation. Target (TGT) announced profits would be hit by efforts to aggressively clear shelves of unwanted products (particularly home goods and clothing), making way for back-to-school and holiday shopping seasons. Target management noted that shoppers are focusing more on non-discretionary items (groceries) as the real impact of inflation takes hold. In addition, Thor Industries (THO) in its earnings report acknowledged that RV dealer Towable inventories are largely rightsized, resulting in a 7% YOY and 34% QoQ decrease in record high towable backlogs.