U.S. Retailers In Mad Rush To Get Rid Of Excess Inventory

As 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.

Photo Insert: Walmart, Target, Gap, Kohl’s and others are trying to sell through a glut of extra merchandise piling up in store backrooms and warehouse.

Walmart, Target, Gap, Kohl’s and others are trying to sell through a glut of extra merchandise piling up in store backrooms and warehouses, Melissa Repko reported for CNBC on Nov. 13, 2022.

Their 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.

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