As the holiday shopping season approaches, a Reuters analysis suggests that major U.S. retailers, including Dollar General, Walmart, and Macy’s, may face the challenge of excess stock for the second consecutive year. LSEG Workspace’s inventory turnover ratios indicate potential vulnerabilities, jeopardizing profit margins and prompting steep discounts for consumers. The analysis reveals that two-thirds of the 30 retailers, such as Foot Locker and Ulta Beauty, exhibit inventory turnover below their peers, signaling either slow sales or excess stock.
The concern stems from a conservative estimate of a 3-4% increase in consumer spending, aligning closely with inflation rates and representing the slowest growth pace in five years. Retail consultant Gerald Storch expresses pessimism, cautioning that some retailers might repeat the mistake of overbuying. Excessive inventory poses challenges, driving up handling, storage, and transportation expenses. Dollar stores, department stores, and clothing chains appear particularly susceptible to this issue, intensifying worries among investors as they brace for another year of potential inventory gluts.
