Daily Management Review

US clothing retailers are facing massive unsold stocks


US clothing retailers are trying to get rid of unsold goods, including spring collections, for tens of billions of dollars, writes The Wall Street Journal.

Phillip Pessar
Phillip Pessar
Retailers offer significant discounts on their websites, but consumers are in no hurry to buy, the publication notes.

Off-price chains such as TJ Maxx, owned by TJX Companies, usually buy unsold clothes and resell at discounted prices, but they are closed. Companies involved in liquidation of stock balances - which is usually the last resort - are already littered with goods from bankrupt retailers who have stopped liquidation sales.

“This is not a wine that only gets better with age,” said PVH Corp. CEO Manny Chiriko at a press conference earlier in April. “Your product is getting worse.”

Some chains pack goods to sell them in 2021, but company executives fear that this might be too expensive and that some of the clothes might go out of style.

Last week, Saks Fifth Avenue, a premium chain of stores, arranged a sudden one-day sale offering spring dresses with discounts of up to 70%. Nordstrom Inc. sells some models with discounts up to 40%. J.Crew Group Inc. offers a 60% discount on spring clothes, and the Gap brand sells all products with a 60% discount.

“This is Black Friday in April,” said Prashant Agrawal, head of Impact Analytics. He compared April prices on the Internet for 400 kinds of goods with prices on Friday after Thanksgiving in the United States, which begins with the traditional Christmas season of sales. According to Agrawal, two-thirds of these products - mainly clothing, but also shoes and jewelry - are sold at Black Friday prices or lower.

However, despite the favorable prices, buyers who are forced to stay at home refuse to spend money on clothes or shoes. Online sales in this segment declined weekly from March 9, including in the week ending April 9, when sales fell by 20% compared to the same period last year, according to estimates by research company Rakuten Intelligence, which tracks e-commerce data.

This means that retailers are forced to look for other ways to get rid of deposits of unsold products and get the money they need so much, the newspaper writes. Many networks resorted to the use of credit lines and sent employees on unpaid leave from March. J.C. Penney Co. and Neiman Marcus Group Inc. missed the April interest payments on loans, indicating a difficult financial condition.

source: wsj.com