NEW YORK, May 28 — Major US retailers that recently scrambled to restock shelves amid product shortages disclosed this week that their stores are now packed with too much merchandise, and some are even doing what was unthinkable just a few months ago: discounting unsold goods.
At Gap Inc, a 34 per cent spike in inventories was caused by poor sales at Old Navy and longer transit times for goods, CFO Katrina O’Connell said Thursday. During the supply-chain crisis, major retailers went on buying sprees, loading up on a range of merchandise and bulking up investments in merchandise so they would have enough goods in stock for shoppers flush with cash due to stimulus checks.
To be sure, retailers are still battling high costs of sourcing goods and hiring workers, which could limit the breadth and depth of promotions they offer, The Roosevelt Investment Group’s Senior Portfolio Manager Jason Benowitz said. Holding excess merchandise proves expensive as warehousing costs rise. Walmart store and distribution centres had 32 per cent more merchandise, Target had 43 per cent more goods compared to a year earlier and Best Buy had 9 per cent more merchandise in the first quarter, the retailers said. Macy’s said on its earning call inventories rose 17 per cent from the same period in 2021.
Data from research firm StyleSage showed mid-tier department stores, such as Macy’s and Kohl’s, stepped up price promotions in mid-May, implementing them on 57 per cent of items.
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