Ballooning inventories force US retailers Walmart, Costco, Gap, and Macy’s to discount goods

Major US retailers that recently scrambled to restock shelves amid product shortages, such as Walmart, Costco, Gap, and Macy’s are now packed with too much merchandise they are forced to discount unsold goods.

During the supply-chain problem, large retailers went on shopping sprees, stockpiling various items and increasing merchandise investments in order to have enough goods in store for buyers flush with cash from stimulus payments.

According to executives and observers, the stores' actions backfired. With inflation rocketing and fuel prices soaring, buyers retrenched quickly, purchasing fewer clothes, televisions, and high-margin goods.

This scenario is causing merchants such as Walmart and Macy's to clear out surplus inventory by discounting more products and giving greater promotions, which may reduce profitability. On the company's earnings call, Walmart CEO Doug McMillon stated that the company has begun aggressive price cuts to stimulate sales of some higher-margin items, such as clothes.

Costco Wholesale Corp reported a 26 percent increase in stocks in its fiscal third quarter ended May 8, which included a "few hundred million dollars" of extra holiday products as well as being a touch heavy on small appliances and home items.

Poor sales at Old Navy and lengthier transportation times for items generated a 34 percent increase in stocks at Gap Inc, according to CFO Katrina O'Connell on Thursday.

Similarly, Macy's CEO Jeff Gennette mentioned an imbalance in inventory with supply chain limitations lifted, resulting in the company obtaining supplies from overseas sooner than planned.

However, customers altered their purchasing habits, buying fewer household things while stocking up on occasion-specific apparel and other merchandise.