Wal-Mart is ordering less merchandise from suppliers because unsold merchandise is piling up in stores.
An ordering manager sent an email to a supplier saying that the company was trying to reduce inventory in the second half of the year, reports Renee Dudley at Bloomberg News.
Other suppliers got similar messages, she writes.
“Wal-Mart’s inventory is well above their goal,” Poonam Goyal, an analyst at Bloomberg Industries, told Dudley. “Most of the inventory increase was because of missed sales.”
Wal-Mart was criticised earlier this year for not putting inventory on store shelves. The company’s workforce has fallen by 120,000 workers since 2008 even though it added hundreds of stores during that time.
The company told CNBC that the story was “misleading.”
Wal-Mart is facing a scary reality: the ailing finances of its core customers, Brian Sozzi, chief equities strategist at Belus Capital, told us earlier this year.
“Wal-Mart shoppers are the barometer of the U.S. consumer, and these emails reflect common sense about customers,” Sozzi told us. “The consumer isn’t mentally or physically ready to spend on discretionary inventory and there’s no reason to be optimistic.”
“The fundamental health of Wal-Mart’s customer is concerning,” Sozzi said.
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