Among all the unprecedented occurrences the industry experienced during the pandemic, the wild swings in inventory levels were among the most difficult to deal with. The over-inventory situation in early 2020 turned into shortages in home merchandise while apparel remained high in the following 24 months. And then it changed again, back to too much goods at the end of last year and into 2023.
Now large public general merchandise retailers are reporting that the inventories are just about back to where they want them, though there are some exceptions out there. These come as most retailers say they expect soft sales for the balance of this year and into the start of 2024.
Macy’s was one such example. In its second quarter results released in mid-August it said it ended the period with merchandise inventories down 10% versus a year ago and down 18% compared to pre-Covid 2019. CEO Jeff Gennette said the department store would continue to balance its sales-to-inventory ratio through the back half of the year.
It was a similar story at Kohl’s in its second quarter results. CEO Tom Kingsbury took the job on a permanent basis earlier this year and made cutting both inventory levels and costs a prime focus. That effort seems to be working out so far as the retailer said during the second quarter, its inventories came down 14%.
Other retailers are reporting results along the same lines even as they remain concerned about lower sales and declining demand across their broad product offerings.