Though imports are down, retailers are contending with an overflow of inventory. Nike, for example, said its North American inventory spiked by 65% in Q1, which is hitting gross margins, as multiple seasons of inventory landed at the same time. Nordstrom is another retailer discounting its products and clearing out inventory to accommodate new items.
For off-price retailers, the glut of inventory hasn’t exactly been good news. Initially, off-price retailers hoped that the influx of stock would have allowed them to buy more goods at lower prices and profit from subsequent price increases. But retailers are holding onto their inventory and marking it down themselves. Burlington CEO Michael O’Sullivan said during the company’s Q2 earnings call that the retailer is focusing on finding the optimal inventory levels and providing an ideal product assortment for shoppers while reducing costs.
Analysts are also watching the impacts of inventory on retailers this holiday season, alongside a slowdown in consumer spending, which could hurt retailers’ sales predictions.
“The holiday season has already started for some shoppers and, thanks to pre-planning, retailers have plenty of merchandise on hand to meet demand,” NRF vice president for supply chain and customs policy Jonathan Gold said in a statement. “Many retailers brought in merchandise early this year to beat rising inflation and ongoing supply chain disruption issues. Despite the lower volumes, retailers are still experiencing challenges along the supply chain, including U.S. ports and intermodal rail yards.”
