Retailers’ biggest holiday wish is to get rid of all that excess inventory

by | Nov 13, 2022 | Business

A clearance sale sign is seen at the Gap retail store on September 20, 2022 in Los Angeles, California.Allison Dinner | Getty ImagesAs some of the nation’s largest retailers report quarterly earnings and revenue this week, Wall Street will pay close attention to another number, too — inventory levels.Here are Wall Street analysts’ favorite retail stocks as giants such as Target get set to report17 hours agoTheir quarterly filings will serve as progress reports, especially as retailers gear up for the holiday season, a time of higher foot traffic, fierce competition for consumers’ wallets and plentiful sales events. Investors want a clearer sense of how much excess stuff retailers have sold off — and how deep they may have to discount to keep merchandise moving.”Inventory is the most important factor,” said Michael Baker, a retail analyst for equity research firm D.A. Davidson. “That’s usually not the case — usually it’s just a factor. Inventory is going to take on more meaning than the other metrics.”Retailers are under pressure to clear out inventory and start fresh in the next fiscal year. Balancing inventory has taken on additional urgency, as economists warn of dwindling savings accounts, rising credit card debt and the risk of a recession.”The idea is to get clean in front of an environment where sales may be a little tougher to come by,” he said.A pandemic hangoverRetailers have dealt with a sharp turnabout over the past six months. Many of the same items that flew off shelves during the pandemic’s earlier days — such as loungewear and coffee makers — have wound up on the clearance rack.With housing and grocery prices surging, fewer Americans are buying big-ticket and discretionary items. Inventory, which accounts for the value of goods in transit as well as those in stock, also rose due to supply chain issues.Sudden changes in tastes “from sweatpants to swimsuits and suitcases” put companies in a tough position, said Oliver Chen, a retail analy …

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