Posted on 09/20/2022 2:43:11 AM PDT by EBH
Walmart, Target, Macy’s and Kohl’s are among retailers that have recently said they are canceling some orders to better balance inventory levels, a replay of a strategy used at the start of the pandemic.
Other steps retailers are using to clear inventories as spending has slowed on some non-discretionary categories are employing markdowns and packing away products for the following year. The elevated inventory levels also reflect intentional over-buying to mitigate shortages and the easing of supply chain constraints.
One risk of canceling orders is straining or damaging relationships with trading partners. After the pandemic arrived, many retailers were called out for not honoring their contracts to pay in full for goods that were in production as well as for requests for postponements, discounts or delays in payment. Several issued statements assuring their commitments, with Levi’s and Gap offering low-cost financing to factories to weather payment delays.
The other risk is not having enough inventory to meet demand. Many retailers and brands indicated they missed sales opportunities during the 2020 holiday season due to overly-lean inventories as demand recovered more quickly than expected.
Second-quarter analyst calls found retailers aware of potential inventory shortfall risks from overly aggressive actions.
Christina Hennington, Target’s EVP and chief growth officer, said steps being taken by the discounter’s buying team include “rigorously reforecasting expectations for the balance of the year and beyond and determining where to reduce future receipts and orders. In some cases, it meant working with vendor partners to reduce our fall receipts in light of our updated expectations. It also meant quickly building compelling promotional plans to drive unit velocity for product we already owned, all with a focus on providing great value and generating excitement for our guests.”
John David Rainey, Walmart’s EVP and CFO, said it had cleared most summer inventory, was reducing exposure in electronics, home and sporting goods, and canceled “billions of dollars in orders” to realign inventories. He said, “Our actions in Q3 will allow us to make significant progress toward rationalizing absolute levels and mix, which will enable our stores to be well positioned ahead of the holiday season.”
David Slavick Co-Founder & Partner, Ascendant Loyalty
Between mentioning recession on investor calls and sharing that order cancellations are happening these are clear signals that retailers are seeing the future and it is not a happy view. Cautionary tales indeed. But at the same time no slowing down efforts to capture share of market and do it profitably. Customers who are members in paid/subscription programs and loyalty program members should be getting special treatment by these very same retailers to secure spend and do it with solid margins on goods sold.
TP? Not again...
Is this sentence saying that business purchases should be continued for purely political reasons.
If so, eff 'em (those trading partners, that is).
Apparently these trading partners aren't wearing their big boy pants.
But-but-but Biden told us there’s no recession!
Yes, wasn’t there a big to do about this supposedly happening months ago?
[Walmart and other retailers are canceling billions of dollars in orders]
Once again.........
GREATEST ECONOMY EVER!!!!!!!
I was in Wallyworld yesterday. It was the first time I’ve been there and probably eight months. I was struck by how full the shelves are, they even have the overtopping on the shelves filled up. People aren’t buying stuff. They had baby formula in stock.
Correct, it looks great for now. But one will soon see prices slashed as that inventory needs to move or should have moved by now.
Prices will be cut to entice consumers to spend, but come post holiday there will be very little inventory going into the 2023 spring season.
Rail strike still not off the table.
Stock up on TP
Picking milk at Wallyworld and they had insulated shopping bags marked down from 16.69 to 1.00. Picked up a few black bags to screen print and give for gifts.
Self-fulfilling prophecies...
A few billion here and there on annual revenues of 570 billion for Walmart?
Excellent!
yup, major discount sales ahead.
All part of Jo Jo and his cultist followers great, recession free economy.
Stock up on your auto parts, they soon will be out of stock!
I can install a bidet.
From what I’ve heard the Xmas product was brought in early. Warehouses are filled up across the country. My bet is they are trying to boost sales to make room. The good side of this is transportation rates are dropping closer to normal.
they probably have tons of unsold inventory still left over from the dreaded lockdowns.
how much tacky Christmas crap can they sell anyhow?
All of this triggers deflation, an even worse topic.
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