- In coming weeks, investors will be looking closely at retailers’ inventory levels, which could impact sales and earnings forecasts.
- Some companies, like Levi Strauss and Urban Outfitters, said they ordered less inventory ahead of the 2020 holidays and might have left some sales on the table because of that.
- Retail experts say companies that aren’t smart could boomerang into bad old habits of overbuying and having to discount merchandise, which weighs on profits.
Halfway through 2020, Levi Strauss was already planning its inventories for the holidays, with little to no insight into what consumers were going to be spending their money on, or even how much money they would have, by the end of the year.
“When the pandemic hit, we had to make a call on how we wanted to play inventory, because we were buying inventory for six months ahead of time ... and not having real visibility to what the world was going to look like in six months,” Levi Chief Executive Chip Bergh said in a recent interview. “And we still have a little bit of that that we’re dealing with today.”
“We decided, we would rather have too little inventory and miss a sale than have way too much inventory and have to be marking stuff down by 50% or 70%, which just isn’t good for brand health,” he said.
‘Less inventory work harder’
...Widlitz predicts apparel retailers’ inventories will remain “tight” for much of 2021, particularly because department stores and other middlemen continue to plan their orders “ultra conservatively.”
“We still likely will have the lower sales, higher margin theme probably intact through next year,” she said.
Shoppers likely are not going to be rushing back to stores anytime soon, either.
Forty percent of consumers say they plan to shop for apparel in brick-and-mortar stores either the same amount or less than they do now after receive the Covid vaccine, according to a recent study by First Insight.