U.S. retailers battle high costs to eliminate Christmas inventory Business & Finance

WASHINGTON: U.S. retailers are scrambling to sell stock of Christmas decorations as the holiday season approaches, after tangled supply chains caused many shipments to arrive only after the holidays last year.

As major economies recovered from the pandemic, businesses struggled to keep up with growing demand, with manufacturing hit by factory shutdowns amid virus outbreaks.

The situation has been compounded by a shortage of shipping containers, as well as delays at ports due to a lack of workers to unload produce and transport it to retailers.

It was “very difficult with supply” last year, especially getting enough Christmas trees and products for customers, said Chris Butler, CEO of decorations seller National Tree.

“This year it’s kind of the opposite,” he said. AFP.

“Every retailer, every manufacturer has a lot of trees, has a lot of tinsel because everything came late,” he added.

Due to supply chain issues, retailers said some of their festive decorations did not arrive until January or February.

“We’ve gone from ‘we don’t have enough’ to now ‘we have too many’,” said James Zahn, editor of trade publication The Toy Book.

Reduced expenses

But with soaring consumer prices weighing on household budgets, business executives fear customers are tightening their purse strings.

“Consumers might not be spending that much,” Butler said. Inflation rose 8.2% from a year ago in September, and the high figure raised concerns that price pressures have become more entrenched.

The Federal Reserve is now walking a tightrope trying to fight cost increases without triggering a recession in the world’s largest economy.

For toymakers like Hasbro, which distributes Monopoly guns, Nerf and Transformers action figures, it all means adjusting to parents’ reduced purchasing power.

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Customers have “become increasingly price-sensitive over the year,” Hasbro CEO Chris Cocks said in an earnings call this month, adding that promotions “will be key in the coming quarters.

Likewise, Mattel, the seller of Barbie dolls and Fisher-Price toys, said this week it would get more discounts as the holidays approach.

“Instead of shippers ramping up to prepare for the holiday season, September was a game-changer with slowing shipping volumes and lower shipping prices,” said Chief U.S. Economist Oren Klachkin. at Oxford Economics, in a recent note.

He cited weaker consumer demand and overstocked sellers, factors that experts say could lead to deep discounts that squeeze profit margins.

Higher costs

Some toys have become about 15% more expensive due to inflation, Zahn of The Toy Book said.

Even when including storage fees and interest, goods that arrived too late for last year’s holiday season were “still a little cheaper” than those added to inventory this year, Costco’s chief financial officer said. Richard Galanti, during a recent earnings call.

Retailers like clothing chain Express are opting to sell their wares this year at outlets instead of liquidating them at lower margins, chief financial officer Jason Judd told a conference in September.

“Santa Claus, snowmen and Christmas trees haven’t changed much,” Jill Timm, chief financial officer of department store chain Kohl’s, told a recent conference.

“They will still sell,” he said.

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