Late in a summer when Walmart and Target have offered discounts on certain items that had grown into surpluses, other major U.S. department stores have been telling investors they will keep slashing prices as they deal with a glut of unsold items.
Kohl's said last week that its inventory was 48% higher than where it stood at the same time last year. Although it attributed some of the increase to investments in its Sephora partnership and other strategy decisions, CEO Michelle Gass said the company plans to increase promotions and get "aggressive" on clearing excess inventory.
Gass said Kohl’s was not alone in doing so.
"We acknowledge that many others are taking similar actions, which will likely make for a more promotional environment in the near term,” she said.
Macy's and Nordstrom also warned Tuesday that they were sitting on more inventory and were moving to cut prices. Macy's said its inventory rose by 7% from a year earlier, while Nordstrom's increased by 10%.
“We’re responding to make sure that our customers are getting the fair value, and we’re liquidating the inventory that needs to be out by a certain date,” Jeff Gennette, Macy’s CEO, told The New York Times in an interview.
Individual outlets are also reporting higher surpluses, including Urban Outfitters, which said Tuesday its retail inventory climbed by 44% year over year.
The surge in inventory comes in response to customers pulling back on some spending, as well as a recent shift in overall spending patterns. Earlier in the pandemic, shoppers began loading up on items like leisurewear as they rode out coronavirus from home. That prompted major retailers to invest heavily in that type of apparel. With lockdowns in the rear-view mirror, those items are no longer in heavy demand.
Macy's said Tuesday it was enacting markdowns "to clear aged inventory ... in seasonal goods, private brand merchandise and pandemic-related categories, such as active, casual sportswear, sleepwear, and soft home."
But the chains are also warning that many shoppers are pulling back on overall spending in the face of inflation and the end of federal pandemic stimulus payments.
"Second quarter results were impacted by a weakening macro[economic] environment," Kohl's said in its fiscal second quarter earnings report last week, adding that "high inflation and dampened consumer spending especially pressured our middle-income customers."