Fashion retailers struggle to manage their inventories

“NO ONE WANTS to buy clothes to sit at home in,” Simon Wolfson, boss of Next, told analysts in March. On the same call the British fashion retailer revealed it might lose up to £1bn ($1.2bn), or 25%, in annual sales this year because of the covid-19 pandemic. Fashion retailers have been clobbered by the mandatory lockdowns in Europe and America. Since they sell non-essential goods, many, including Next, have been forced to close warehouses and stop online sales, too. A season’s worth of clothing will go unsold.

Many retailers flogging non-essential goods are stuck with useless inventory—with more piling up as pre-pandemic orders stream in from factories in faraway emerging markets. But it is a particular headache for fashion firms. Unlike food or some medicines, their products do not go off. But many go out of style—sometimes, as with seasonal apparel collections, rather quickly. Inditex, the world’s biggest fashion retailer, announced that it is taking a €287m ($313m) hit to inventories. Other big fashion retailers will follow suit, predicts Aneesha Sherman of Bernstein, a research firm. American retail sales in March fell by 8.7% from February, the biggest monthly decline since 1992. Those of clothes fell by half.

Inventories are not easy to get right in good times—which these are not. Retailers always run the danger...



via Business Feeds

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