Retailers navigate fares, out-of-stocks, and uncertain futures

Despite being generally optimistic about the company’s earnings outlook, retail finance executives continue to face many challenges as they plan for the fall and holiday seasons.

Retailers are forcing companies to keep inventory low and tackle ongoing supply chain disruptions that often cause delays. Pay insurance premiums to accelerate shipments..Shipping from Vietnam and other Southeast Asian countries I am late Local governments limit factory capacity due to delta variants, which can lead to delays or shortages of certain products. Companies say they have experienced a level of uncertainty that has not been seen since the outbreak of the pandemic, questioning their financial plans.

Despite these obstacles, US financial officers maintain a positive outlook for future profits and demand for products, in part due to strong consumer spending.Sale at retail stores in the United States 0.7% increase in August, A backlash from the July drop, said the Commerce Department.

Approximately 30% of the 108 retailers in the S & P 1500 Index have revised their annual guidance through August 31st. Almost everything except discount retailers has been revised upwards.

Dollar tree Ltd,

According to the data provider

FactSet Research Systems Ltd

This is an increase of 25 percentage points over the same period last year, when 5 percent of retailers updated their guidance. About 8% haven’t changed their annual guidance so far this year, while the remaining 62% haven’t provided such forecasts.

Burlington store Ltd


Victoria’s Secret

& Co. — Cited as a reason for uncertainty.

The Chief Financial Officer wants to offset some hurdles, such as ordering inventory faster than usual, revising long-term contracts with shipping companies, spending more on air freight, raising prices, and relocating businesses. Is working on.

For example, Dollar Tree, based in Chesapeake, Virginia, has signed a three-year contract for a dedicated charter vessel for international shipping, 30 days ahead of schedule for seasonal inventory orders, executives said. As of July 31, the chain, which operates 15,865 stores in the United States and Canada, will ship more goods than planned by purchasing spot market capacity as a contracted maritime carrier. He said it was planned. You can only move from 60% to 65% Of the agreed amount for the year, down from the 85% Dollar Tree forecast for May.

Dollar Tree announced in August that it has lowered its forecast for the fiscal year ending January from $ 5.80 to $ 6.05 in May and from $ 5.40 to $ 5.60 due to rising fares. The company generated $ 6.34 billion in revenue in the quarter ended July 31, up 1% year-on-year. Profit was up 8% to $ 282.4 million. Dollar Tree declined to comment further.

Macy’s Ltd,

It also operates the Bloomingdale’s and Blue Mercury brands, but predicts that supply constraints will be the biggest challenge in the fall and winter months, said CFO Adrian Mitchell.

Those who have been playing that role since November.. However, the increase in Delta cases does not pose a significant threat to a company’s business, as consumers are now experienced in dealing with Covid’s limits and are likely to be able to navigate new limits.

He said New York-based retailers ordered inventory four to six weeks in advance to secure products early. Macy’s works with vendors to check inventory status and expected delivery timings when submitting orders and throughout the process, Mitchell said.

The company, which operated 726 stores at the end of the second quarter, didn’t say how many weeks before the pandemic ordered inventory.

Adrian Mitchell, Chief Financial Officer of Macy’s.


Macy’s Inc.

“Let’s stay ahead of the curve,” Mitchell said. “Otherwise we lose a lot of weight.”

Macy’s reported revenue of $ 5.65 billion, up 58.7% in the last quarter. The profit was $ 345 million, compared to a net loss of $ 431 million in the previous year.

Sporting goods retail store

Academy Sports & Outdoors Ltd

Chief Financial Officer Michael Malikhan said he has a long-term plan to manage supply chain challenges and expects these issues to continue until the end of the year or beyond. Katie, Texas-based chain has agreed with existing sea freight partners to ship more than planned over the next two years, he said. Academy Sports refused to provide the details of these volumes.

In recent weeks, the company has booked more cargo in advance, according to Marikan. “We are in a position to get more inventory than we have,” he said.

The academy’s inventory totaled $ 1.12 billion in the quarter ended July 31, a 24% increase over the same period last year and a 7% decrease from 2019, the company said.

Michael Mullican, Chief Financial Officer of Academy Sports & Outdoors.


Academy sports and the outdoors

“We’re shining about $ 100 million in light where we want to be,” said Malikan, who said customers could choose from three or four treadmills instead of six. I added. As of July 31, the company has 259 stores in 16 states in the United States.

Some retailers want as much inventory as possible in their stories, but other companies, usually apparel vendors, are looking for it. Reduce inventory and increase profit margin..Companies including

Abercrombie & Fitch Ltd

, Guess Inc.and

gap Ltd

Over the last few weeks, they have said they are considering selling apparel at regular prices, so they are closely monitoring inventory levels.

Janine Stichter, senior vice president of investment firm, said inventory-seeking companies could have problems with late arrivals of products that are seasonal or part of a collection, which could lead to significant price cuts. Said there is.

Jeffreys Financial Group Ltd

“The long lead times to get products mean that if demand slows, the wheels to secure inventory are already in motion and retailers can’t brake fast enough.” Stichter said.

Write to Mark Maurer And with Nina Trentman

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Retailers navigate fares, out-of-stocks, and uncertain futures

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