Some of the largest retailers in the country useas an excuse to raise prices and reap billions of dollars in extra profits, a business watchdog group charged on Friday.
Companies such as CVS Health, Kroger and TJ Maxx, parent company TJX, appear to have raised prices unnecessarily in 2020 and 2021 at a time when Americans were dealing with the economic fallout from the, said Accountable.US in a new report. Instead of keeping prices stable for struggling families, companies have overcharged Americans and prioritized profit, the group claims.
Accountable.US said it reviewed the financial statements of the country’s top 10 retailers over the past two years – including Lowe’s and Target – and found that they had collectively increased their profits by $24.6 million to a total of $99 billion.
The new figures come as companies take advantage of theirsince the 1950s. Last year, pre-tax profits soared 25% from 2020, far outpacing the increase in consumer prices. The report highlights an ongoing debate about the causes of inflation, with some consumer advocates claiming that companies are using inflation as a justification to pass on even higher price hikes to consumers.
The companies have used some of those profits to increase CEO compensation and provide significant benefits to shareholders, such as increased dividends or share buybacks, according to the report. Indeed, many business leaders have bragged to investors about their ability to pass on price increases to consumers.
“As corporate profits are at their highest levels in nearly 50 years and companies are delivering billions in new benefits to their shareholders over the past year, it raises serious questions about whether industries as retail have had to raise prices for families to such excessive degrees,” Accountable.US 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.
The Home Depot told CBS MoneyWatch that the Accountable.US report misrepresents why the company’s 2021 earnings rose.
“While our customers value value, we are continuously 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 overwhelming demand in home improvement.”
Inflation: supply chain, demand issues
Admittedly, inflation is rising sharply due to a number of underlying economic issues, such as supply chain bottlenecks, labor shortages and strong consumer demand. US inflation hit a new 40-year high in March, consumer prices— 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 on a 2021 earnings call that the grocery chain is “shifting higher costs to the customer where it makes sense.” Also last year, TJX CEO Ernie Herman told investors the company “has a strategy to surgically increase retail [prices] on some items is on track, and we think it’s working very effectively.”
Some companies have publicly blamed inflation for raising prices, but Accountable.US says in its report that those increases far exceed what they need to cover their own increased costs.
The report notes, among other examples, that Lowe’s posted a profit of $8.4 billion in its most recent quarter touting its “new pricing strategies.” TJX, parent company of TX Maxx, Marshalls and Home Goods, saw profits soar to $3.3 billion last year as the CEO spoke of the company’s “aggressive” price increases. Target grew its earnings to $6.9 billion in 2021, a year its CEO touted “a year of record growth.”
Accountable.US said it expects retailers to continue raking in billions in profits from rising prices. The National Retail Federation predicts retailer profits will grow between 6% and 8% in 2022.
“It’s time for businesses to finally help with the burden that average Americans have carried throughout the health crisis,” Herrig said. “Companies can start by stabilizing prices for consumers instead of chasing even higher profits – in addition to finally paying their fair share of taxes.”