Black Friday Sale 2022: Blowout Bargains Smell Musty This Year
Your Black Friday bargain is most likely spring's leftover sweatpants.
American retailers have too much stock of everything from toys to women's casual tops. While the markdowns will be welcomed by many cash-strapped shoppers, the holiday deals underline companies' struggle to work through bloated inventories pressuring their profits.
To recap: In 2021, supply-chain snarls left stores scrambling to fill empty shelves. Black Friday deals were stuck in the Pacific. As orders slowly made their way from Asia in the early part of this year, consumers started to rein in spending amid soaring inflation, only buying things they needed (e.g., food) and giving up splurges and impulse purchases. Suddenly, a dearth of exercise bikes and kitchen appliances turned into a glut that needed to be heavily discounted.
A simple analysis of the spread, or difference, between sales and inventory growth shows the mountain of unsold goods in the US has shrunk since the first quarter. But it hasn't completely dissipated.
Macy's Inc. has managed its inventory well throughout the year, but Kohl's Corp. remains overstocked compared with last year. Target Corp.'s inventory increased in the third quarter to about 50% above where it was during the same period three years ago. About a third of that growth reflected new items arriving early as supply-chain knots loosened. At Walmart Inc., inventories, though significantly reduced, remain elevated compared with pre-pandemic levels.
Retailers in the business of selling non-essentials are especially ripe for dramatic discounting this holiday season. Analysts at UBS Group AG said Target was being particularly aggressive in promoting home furnishings, electronics and toys. Chief Executive Officer Brian Cornell
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