Macy's officials said stores increased markdowns of excess inventory. Photo: Victor J. Blue/Bloomberg via Getty Images
The great clearance and overstock sale of 2022 continues at Macy's with consumers still feeling inflationary pressures, officials at the department store chain said Tuesday.
Why it matters: Retailers need to mark down merchandise to clear access inventory as they prepare for the important holiday shopping season, which for the third year is expected to kick off early, a trend started in 2020 to spread out sales and consumer demand during the pandemic.
Driving the news: Macy’s officials spoke Tuesday during an earnings call about how a double-digit increase in grocery prices is eating into consumers’ budgets, changing behaviors and increasing the need to discount.
The big picture: Overstocking has been an industry-wide problem but retailers are still fearful of not having the right mix of goods to meet consumer demand, Axios’ Hope King reports.
- Target and Walmart have also talked about excess inventory in recent earnings calls and the impact of inflation on shoppers.
- Sleepwear, active and casual sportswear — clothing that was popular during the pandemic when more people worked from home — are among the items retailers are marking down.
- It's not just clothing as Best Buy also is looking to discount and said in July that it expects "pressure from increased promotional activity in the consumer electronics industry.”
What they're saying: "During the quarter, we observed that all retailers were working to shed their excess inventory, setting the industry up for higher permanent markdowns and promotional levels," Macy's Inc. Chairman and CEO Jeff Gennette said Tuesday in the earnings call.
- "The industry-wide inventory levels along with the slowdown in consumer discretionary spend resulted in elevated inventory levels within certain categories," Gennette said.
- “We are targeting appropriate inventory levels by the end of the year and plan to be aggressive and taking the necessary markdowns to drive faster sell-throughs in our aged inventory in seasonal goods, private brand merchandise and pandemic-related categories,” he said.
Yes, but: Gennette said more than 55% of Macy's offerings for the holiday season will be new, an increase of 30 percentage points from the 2019 holiday season "to meet customer expectations."
- Ahead of the holidays, Macy's is adding Toys R Us shops to every store by Oct. 15.
Of note: Gennette said "holiday buying" is expected to start in October as it has in pandemic years.
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