Retailers, consumers and prices
Check Out who’s holding the most and least inventory these days.Jewelry retailers are now holding their merchandise the longest among retail peers, according to a study by financial analysis firm Sageworks. In the last 12 months, jewelry retailers have held inventory for 102 days — 19 days longer than they did in 2006 and the same as in 2008. The sector has been among the top sufferers in the recession, with consumers shying away from jewelry to save money, while retailers resort to discounts and promotions to sell off merchandise.”The longer it takes for inventory to turn, the more serious the implications are on cash flow and profits,” the study noted. Lawn and garden equipment stores took the No. 2 spot, holding inventory for 14 days more while beer, wine and liquor stores and building materials retailers were third and fourth on the list, holding merchandise for 12 and eight days more than they did in 2006 respectively.The surprise factor? Auto parts and tire stores came in last in the list holding their merchandise for four fewer days than in 2006. Why, you ask? “Likely because people are repairing what they already own as opposed to buying new,” the study said. That’s more bad news for car sellers.Also in the basket:Nike orders disappoint, shares fallH&M profit beats forecast Downwardly mobile: Living on less in the city (WSJ - susbscription needed)(Photo/Reuters)
Check out how bad retail sales can actually mean good earnings.
It all comes down to inventory management. Retailers have aggressively cut inventory levels in order to cope with the slumping economy.
The bad news resulting from that strategy came last week when many retailers posted disappointing sales, in part because they had less goods on hand to sell.
“Our inventory levels in … clearance and transitional categories were significantly lower than last year, affecting sales results, but leading to improved gross margins,” Kohl’s Chief Executive Larry Montgomery said in a statement.
But the good news could come over the next several weeks, when retailers report second-quarter earnings. Those slashed inventories should have helped them preserve margins, which help profits.
So it’s not like the U.S. consumer is buying that much. But at least retailers didn’t get left with shelves of unwanted inventory.
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