Three themes we have seen in this retail earnings season: Inventory Excess, Continued Supply Chain Delays, and Inflation.

Inventory Excess

Inventory excess is currently a widespread challenge across retail. Everyone from Target and Kohl’s to Gap and Urban Outfitters is taking action to address the issue. Companies are mitigating the risk going forward by executing pack and holds, cancelling future orders, and/or perusing aggressive pricing strategies to alleviate the inventory strain.

Supply Chain Delays

Supply chain delays are improving but continue to impact retailers. Historically high import volumes are straining ports and supply chain networks. Retailers have had time to set up altered plans and are adjusting product planning/ordering timelines to accommodate.

Inflation

Although inflation is starting to decline it is still impacting retail. Across the quarter, inflation rates have been historically high, peaking in June at 9.1%. This not only alters consumer spending but also increases product carrying costs for retailers.