U.S. retailers fill store shelves with leftover holiday stock

NEW YORK, NY, Oct 19 (Reuters) – The ghost of Christmases past is haunting store shelves, retail floors and warehouses across the United States this year.

Retailers had $548.8 billion in inventory in July, a 21.6% increase from a year ago, according to U.S. Census data.

With less than 10 weeks to Christmas 2022, major retailers including Costco, Kohl’s and Express Inc. are selling holiday sweaters, artificial trees and other decorations that had been stuck in transit or packed away in warehouses during the coronavirus crisis. the supply chain that threw a spanner at Christmas 2021.

While it’s not ideal for retailers to hold on to last year’s products, the discounts will be a boon for consumers under pressure from inflation, which hit 8.2% in September.

“This year is going to be a fantastic year to buy a tree,” said Chris Butler, chief executive of the National Tree Company. “Everyone is going to try to go through the inventory they have to make sure they’re cleaning up a bit ahead of the 2023 season.”

Last year’s holiday-themed pajamas are available on Kohl’s shelves for 25% off at $39. And clothing retailer Express Inc. is putting its surplus holiday items and New Year’s dresses into its outlets, the company said at the Wells Fargo Consumer Conference in September.

Over the past few years, retailers have spent big bucks on hard-to-get toys, shiny gadgets and trendy clothes that their buyers believe will lure shoppers into stores.

But this year, some have reduced their purchases of new goods while others have focused on eliminating old inventory.

Retailers are betting shoppers won’t be shy about choosing from 2021’s cut-price décor and styles. But Liza Amlani, director of consultancy Retail Strategy Group, said shoppers may lose interest when they feel that some of last year’s trending merchandise is “no longer relevant”.

Even though retailers have slashed prices by up to 40%, shoppers so far this year are hesitant to make big holiday purchases.

Online prices for electronics, toys and clothing fell in September, according to Adobe’s Digital Price Index, with retailers offering deals to attract early holiday shoppers and clear inventory before Black Friday, the day after Thanksgiving, when many Americans traditionally shop for gifts. .

Rising markdowns and slowing consumer demand could hurt companies’ gross margins, Cowen retail analyst John Kernan said in an October note. Excess inventory also increases inventory costs for retailers.

Kohl’s and Express reported gross margins of 33.05% and 39.6% on their second-quarter earnings calls in July, while Costco’s fourth-quarter margins were 11.84% in August. Analysts expect gross margins to decline for each of the companies in the next quarter, according to data from Refinitiv.

Costco stocks its floors with vintage faux fir trees.

“If you add the cost of owning them and a bit of interest charges, I think they’re still a bit cheaper than the ones we added to inventory this year,” said chief financial officer Richard Galanti. during a September call with investors. .

“The good news,” he said, “is that (Christmas trees) don’t really change in style.”

Reporting by Arriana McLymore and Doyinsola Oladipo in New York Editing by Claudia Parsons

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