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Retailers are grappling with excess inventory

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May 24, 2022
Average number of inventory days for select retail companies
Data: Sentieo; Chart: Simran Parwani/Axios

The average number of days some large retailers are keeping products in their inventories has grown in the past few months, according to data compiled by financial research platform Sentieo.

Why it matters: With concerns about consumer spending starting to cool, investors are worried that retailers are going to be left with more inventory than they can sell.

  • "The consumer is around 70% of US GDP so this inventory build-up is a flashing red light," Nick Mazing, director of research at Sentieo, tells Axios via email.

Context: With retailers continually grappling with supply chain issues, many companies have shifted from "just in time" inventory management to "just in case."

  • But the tides have turned. Investors are now sounding the alarm about too much inventory buildup, which can mean more costs to warehouse items and markdowns to get products off shelves.

The bottom line: "The data paints a worrisome picture of consumer demand as we lap the stimulus payments, and food and energy inflation stays high," Mazing says.

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