Posted by on May 28, 2022 7:24 pm
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Pandemic shipping delays cause excess inventory at Walmart, Costco, Target

In this photo taken on Aug. 5, 2010, a container are being load into a cargo ship at the Tianjin port in China. China's exports grew strongly in July but import growth fell as its rapid economic expansion cooled, possibly hurting global demand. Exports rose 38.1 percent over a year ago to $145.5 billion while imports gained 22.7 percent to $116.8 billion, the customs agency reported Tuesday. Export growth eased from June's 43.9 percent rate while import growth tumbled from June's 34.1 percent expansion. (Andy Wong/AP)

Pandemic shipping delays cause excess inventory at Walmart, Costco, Target

Jenny Goldsberry May 28, 06:51 PMMay 28, 06:51 PM Video Embed

Retailers have seen their inventories balloon as a result of shipping delays caused by the pandemic.

A 26% increase in inventories since this time last year has added up to $44.8 billion between S&P consumer indexes with a market value of at least $1 billion and reported earnings in the last two weeks, according to a Bloomberg report. Target reported a 43% increase in inventory, Walmart reported a 32% increase, Macy’s reported a 17% increase, Costco reported a 26% increase.

Retailers will now face paying more in storage fees or issuing discounts to make room for more inventory. The latter could be especially difficult for businesses given the steep rise in inflation. Excess inventories typically signaled a recession and or overall economic downturns in the past. Goldman Sachs predicts a 35% chance of a recession in the next two years, while Wells Fargo’s economic model projects a 30% chance of a recession occurring in the next six months alone.

H&M REACHES $36 MILLION SETTLEMENT OVER UNUSED GIFT CARDS

The Congressional Budget Office indicated that U.S. real gross domestic product will increase by 3.1% this year in a report earlier this week.

Walmart shares are up at over $128 a share at the time of this report, along with Costco at over $470, Target at over $167/share, Macy’s at over $23/share, and Gap at over $11/share.

Meanwhile, personal consumption expenditures price index, measured inflation decreased to 6.3% in the 12 months ending in April. Personal consumption expenditures, when adjusted for inflation, still increased 0.7% since March. That’s the largest rate it’s increased for the last three months.

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