Major retailers accused of profiteering from rising inflation

Some of the largest retailers in the country have been using it rising inflation rates as an excuse to raise prices and make billions of dollars in additional profits, a corporate control group charged on Friday.

Companies like CVS Health, Kroger, and TJ Maxx’s parent company, TJX, appear to have increased their prices unnecessarily in 2020 and 2021 at a time when Americans were facing the economic consequences of coronavirus pandemic, said Accountable.US in a new report. Instead of keeping prices stable for troubled families, corporations have overcharged Americans and prioritized profits, the group says.

Accountable.US said it looked at the financial statements of the country’s top 10 retailers over the past two years, including Lowe’s and Target, and found that they collectively increased their profits by $ 24.6 million for a total total $ 99 billion.

The new figures come as companies enjoy theirs most profitable year since the 1950s. Profits before taxes last year soared 25% from 2020, far outpacing rising consumer prices. The report highlights an ongoing debate over the causes of inflation, with some consumer advocates arguing that corporations are using inflation as a justification for conveying even higher price increases to consumers.

Companies have used some of these profits to increase CEO compensation and offer large profits to shareholders, such as an increase in dividends or share repurchases, according to the report. In fact, many business leaders have bragged to investors about their ability to pass on price increases to consumers.

“When corporate profits are at their highest levels in almost 50 years and companies are filling their shareholders with billions in new profits over the past year, serious questions arise as to whether industries such as retail have had ‘raising household prices to such an excessive degree’. U.S. President Kyle Herrig said 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 misrepresented why the company’s profits increased in 2021.

“As our customers stand for value, we are continually working with our suppliers to keep costs as low as possible for our customers,” the company said in a statement. “Our growth has been based on an overwhelming demand for home improvements.”

Inflation: supply chain, demand problems

Inflation is likely to rise sharply due to a number of underlying economic problems, such as bottlenecks in the supply chain, labor shortages and strong consumer demand. Inflation in the US hit a new 40-year high in March, with consumer prices has increased by 8.5% in the last 12 months – the fastest annual rate since the Reagan administration.

Retail executives have been open about their recent price hikes. Kroger Chief Financial Officer Gary Millerchip said during a call on earnings in 2021 that the grocery chain “is shifting higher costs to the customer when it makes sense to do so.” Also last year, TJX CEO Ernie Herman told investors that the company “strategy to surgically increase retail [prices] in selected articles it is up and running and we believe it works very effectively “.

Some companies have publicly blamed inflation for rising prices, but Accountable.US argues in its report that these increases are far greater than they need to cover their own cost increases.

The report notes, among other examples, that Lowe’s posted $ 8.4 billion in profit in its most recent quarter as it promoted its “new pricing strategies.” TJX, the parent company of TX Maxx, Marshalls and Home Goods, saw last year’s profits rise to $ 3.3 billion when the CEO spoke of the company’s “aggressive” price increases. Target raised its profits to $ 6.9 billion in 2021, a year in which its CEO announced “a year of record growth.”

Accountable.US said it expects retailers to continue to make billions in profits due to price hikes. The National Retail Federation predicts retail profits will grow by 6% to 8% by 2022.

“It’s time for corporations to finally help bear the burden that the average American has taken on during the health crisis,” Herrig said. “Corporations can start stabilizing prices for consumers instead of pursuing even higher profits, in addition to finally paying their fair share of taxes.”

In:
• Inflation