Some of the country’s largest retailers are using high inflation As an excuse to raise prices and get billions of dollars in additional profits, a corporate surveillance team blamed on Friday.
Companies like CVS Health, Kroger and TJ Maxx, the parent company of TJX, seem to have raised their prices unnecessarily in 2020 and 2021 at a time when Americans were dealing with the economic consequences coronavirus pandemicsays a new message from Accountable.US report. Instead of maintaining stable prices for families in need, corporations overestimated Americans and prioritized profits, the group said.
Accountable.US said it studied the financial statements of the nation’s 10 leading retailers over the past two years – including Lowe’s and Target – and found that together they increased their profits by $ 24.6 million to a total of $ 99 billion.
New numbers come when companies use them the most lucrative year since the 1950s. Profit before tax last year grew by 25% compared to 2020, well ahead of rising consumer prices. The report highlights the long debate over the causes of inflation, with some consumer advocates arguing that corporations are using inflation as an excuse to pass on to consumers even higher price increases.
The companies used part of that profit to increase CEO compensation and give shareholders big benefits such as increased dividends or share buybacks, the report said. Indeed, many corporate leaders boasted to investors of their ability to pass on price increases to consumers.
“With corporate profits at their highest level in nearly 50 years and companies showering billions of new benefits on their shareholders over the past year, the serious question is whether industries like retail have had to raise family prices to such an extent. “, Said US President Kyle Herig in a statement to CBS MoneyWatch.
Amazon, CVS Health, Kroger, Lowe’s, Target and TJX did not immediately respond to requests for comment on the report.
Home Depot told CBS MoneyWatch that the Accountable.US report incorrectly presented the reason for the company’s increase in profits in 2021.
“Because our customers stand up for value, we are constantly working with our suppliers to keep costs for our customers as low as possible,” the company said in a statement. “Our growth has been based on the huge demand for home improvement.”
Inflation: supply chain, demand problems
Undoubtedly, inflation is rising sharply due to a number of major economic problems, such as bottlenecks in supply chains, labor shortages and strong consumer demand. US inflation reaches a new 40-year high in March at consumer prices jumped 8.5% in the last 12 months – the highest annual figure since the Reagan administration.
Retail executives have been open about their recent price increases. Kroger CFO Gary Millerchip said during a call about earnings in 2021 that the grocery store chain “carries higher costs to the customer if it makes sense”. Also last year, TJX CEO Ernie Herman told investors that the company’s “strategy to surgically increase retail [prices] full-fledged work is underway on some elements, and we believe that it is working very effectively. ”
Some companies have publicly blamed inflation for the price increase, but Accountable.US claims in its report that the increase far exceeds what they need to cover their own increased costs.
The report, among other examples, notes that Lowe’s recorded revenue of $ 8.4 billion in the last quarter, advertising its “new pricing strategies.” TJX, the parent company of TX Maxx, Marshalls and Home Goods, saw last year’s revenue rise to $ 3.3 billion when the CEO spoke of an “aggressive” rise in company prices. Target increased revenue to $ 6.9 billion in 2021, for the year its CEO advertised a “year of record growth”.
Accountable.US said it expects retailers to continue to make billions in profits due to rising prices. The National Retail Federation predicts that retail profits will grow from 6% to 8% in 2022.
“It’s time for corporations to finally help take on the burden that the average American has taken on during the entire health care crisis,” Herrig said. “Corporations can start by stabilizing prices for consumers instead of striving for even more profits – in addition to finally paying a fair share of taxes.”