🍦 Welcome back! Join Axios tomorrow at 12:30pm ET for a conversation with Sequoia Capital partner Pat Grady and former SEC chair Harvey L. Pitt. Register here.

Today's newsletter, edited by Pete Gannon, is 671 words, a 2½-minute read.

🔔 The dashboard: The S&P 500 closed up 1.0%.

  • Biggest gainer? APA Corp. (+5.9%), the oil and gas company, following an analyst upgrade yesterday.
  • Biggest decliner? Mosaic (-4.0%), the fertilizer company. ¯\_(ツ)_/¯

1 big thing: Retailers have too much stuff

Average number of Q1 inventory days at Target
The average number of days a company's inventory lasts before it is sold; Data: Sentieo; Chart: Axios Visuals

Stockpiling products over the past year has led to a glut of stuff that retailers are desperate to get rid of, Hope and Axios Pro's Kimberly Chin write.

Why it matters: Retailers have limited physical space to store and sell products.

  • When they misjudge what people want to buy or when goods will arrive, they have to pay more to accommodate that excess.
  • That translates into higher costs and deeper discounts that eat into profits.

Driving the news: Target today said its operating margins would be smaller than expected this quarter as it takes several measures to clear out inventory, such as canceling orders and marking down prices.

  • The retailer's first-quarter inventories were at their highest levels for the period in at least a decade, according to an analysis by Sentieo.

The big picture: “People are shifting their shopping habits [and] are buying different things right now. That requires a lot of planning [and] a lot of adjustment to strategy,” Arun Sundaram, senior equity research analyst at CFRA, tells Axios.

Be smart: Supply chain snarls have played a major role in reshaping inventory planning for Target and its peers, like Walmart, Costco and Macy’s.

  • Instead of a "just in time" supply chain, retailers over the pandemic moved to a "just in case" mindset to ensure shelves were stocked and to get ahead of future disruptions.

The bottom line: Inventory level issues that we've seen with COVID winners like Peloton and Clorox are now showing up across the broader retailer landscape, Nick Mazing, director of research at Sentieo, tells Axios.

Go deeper with Kim's piece in Axios Pro.

2. Charted: Smucker weathering recall

Data: Yahoo! Finance; Chart: Axios Visuals

J.M. Smucker reported Tuesday that its sweeping Jif peanut butter recall would cost about $175 million, but said its business is still humming largely due to price increases, Nathan writes.

  • Smucker’s stock on Tuesday regained some ground it had lost since the mid-May recall as investors cheered the brighter outlook despite the Jif recall price tag.

What they're saying: “This will be a big headwind in their upcoming fiscal year,” CFRA's Sundaram tells Axios.

  • The recall will cause Smucker’s sales to be 2% lower than otherwise expected in the 2023 fiscal year, according to the company.

Yes, but: The company said it expects an 8% sales increase in 2023 when factoring out the Jif impact.

Go deeper.

3. What's happening

🤑 PayPal is finally enabling cryptocurrency withdrawals. (Axios)

💳 Consumer borrowing surged for a second straight month in April. (Bloomberg)

4. Starbucks' Schultz creates $100M diverse biz fund

Photo illustration: Aïda Amer/Axios. Photos: Steven Ferdman, Beata Zawrzel/NurPhoto via Getty Images

The family foundation created by Starbucks founder Howard Schultz and his wife plans to invest $100 million in a fund targeted toward “diverse businesses as vehicles for fostering a more inclusive economy," Axios' Javier E. David writes.

  • The Entrepreneurs Equity Fund (EEF) will provide money to business creators from marginalized communities, making direct investments in diverse businesses and boosting access to capital.

Why it matters: Traditionally, business startups led by Black and Latino entrepreneurs have had a difficult time raising funds.

💬 Javier's thought bubble: Schultz, who returned to the helm of Starbucks in April, is planning to relinquish the top job sooner rather than later.

  • He briefly flirted with an independent White House bid in 2019 before ultimately dropping out. The EEF could presage a rekindled interest in public life, or another run for office.

Go deeper.

5. Late's no longer fashionable

Illustration: Sarah Grillo/Axios

Showing up on time is suddenly in style, Nathan writes.

What's happening: The pandemic has ushered in a new emphasis on punctuality, the New York Times reports.

  • "It’s no longer fashionable to be fashionably late," the Times says. "Punctuality is having a moment."

The big picture: Remote work has made it easier to show up to meetings on time since it erases the commute, that age-old excuse for being late.

6. What they're saying

"Both of us probably could've used a better term than transitory."
— Treasury Secretary Janet Yellen at a Senate Finance Committee hearing today, referring to her and Federal Reserve chair Jerome Powell's comments on inflation last year.

Thanks to Sheryl Miller for copy editing today's (and every day's) newsletter.