US retailers stuck with excess stock offer bargains as holiday season nears
By Ananya Mariam Rajesh and Savyata Mishra
(Reuters) — As the holiday shopping season approaches, major U.S. retailers from Dollar General (NYSE:DG) to Walmart (NYSE:WMT) and Macy's (NYSE:M) could be saddled with too much stock for a second straight year, according to a Reuters analysis, jeopardizing retailers’ profit margins and generating steep discounts for shoppers.
LSEG Workspace, a financial news and data platform, calculated inventory turnover ratios of 30 major U.S. retailers for Reuters. To determine which chains are most vulnerable to carrying excess stock — a problem that raises retailers' costs — LSEG divided each retailer's cost of goods sold by the average value of its inventory in the second quarter.
Stuffed stockrooms are especially challenging for retailers this year because American shoppers are expected to spend just 3% to 4% more this season, roughly on par with inflation. That would represents the slowest pace of growth in five years, according to industry estimates.
«I am relatively pessimistic about the holiday season,» said Gerald Storch, retail consultant and former Target vice chairman and ex-CEO of Hudson (NYSE:HUD)'s Bay. «It's possible that some retailers could be overly optimistic and make that mistake of buying too much yet again.»
Carrying too much inventory is a problem for many retailers because it drives up retailers' expenses for handling, storing and transporting products, said Jeff Bornino, North America President at TMX Transform, and a former supply chain executive at Kroger (NYSE:KR). «The undeniable reality in retail is that 15-20% of products occupying store shelves need to go,» he said.
According to the Reuters analysis, two-thirds of the 30 retailers, including sporting
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