Last year's inventory to be found on U.S. retail shelves leading up to Christmas

Robert Besser
22 Oct 2022, 03:17 GMT+10

In July, major American retailers, including Costco, Kohl's and Express Inc., were sitting on inventory worth $548.8 billion, a 21.6 percent increase from last year.
The resulting discounts will benefit consumers under pressure from inflation, which reached 8.2 percent in September.
Even with retailers cutting prices by up to 40 percent this year, many shoppers are still hesitant to make major holiday purchases.

WASHINGTON D.C.: According to U.S. Census data, in July major American retailers, including Costco, Kohl's and Express Inc., were sitting on inventory worth $548.8 billion, a 21.6 percent increase from last year.

With less than 10 weeks to go before Christmas 2022, retailers are expected to fill their shelves with this leftover inventory, which accumulated in warehouses due to the supply chain crisis that affected Christmas 2021.

The resulting discounts will benefit consumers under pressure from inflation, which reached 8.2 percent in September.

"This year is going to be a fantastic year to buy a tree," said National Tree Company Chief Executive Officer Chris Butler, as quoted by Reuters.

During the Wells Fargo Consumer Conference in September, clothing retailer Express Inc. said it will sell excess holiday items and New Year's Eve dresses in its outlets this holiday season.

In past years, retailers spent heavily to display rare toys, the latest gadgets and trendy clothing that they thought would attract shoppers.

However, this year, some will cut back on their purchases of new merchandise, while others will focus on clearing old inventory.

Liza Amlani, principal at consultancy Retail Strategy Group, said shoppers could lose interest when they feel that some of last year's trendy merchandise are "no longer relevant," as reported by Reuters.

Even with retailers cutting prices by up to 40 percent this year, many shoppers are still hesitant to make major holiday purchases.

According to the Adobe Digital Price Index, online prices for electronics, toys and apparel were down in September, despite retailers offering deals to entice early holiday shoppers and clear inventory before Black Friday.

In an October note, Cowen retail analyst John Kernan said increased markdowns and slowed consumer demand may hurt companies' gross margins.

On their second-quarter earnings calls in July, Kohl's and Express reported gross margins of 33.05 percent and 39.6 percent. Costco's fourth-quarter margins were 11.84 percent in August.

According to data from Refinitiv, gross margins for each of the companies are expected to shrink in the next quarter.

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