Department stores are at risk from an ‘unprecedented’ level of excess inventory, analysts say

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Department stores, like Nordstrom Inc. JWN, -1.72%, Macy’s Inc. M, +0.30%, Kohl’s Corp. KSS, +5.17% and Dillard’s Inc. DDS, +1.13% are at risk from what analysts call an “unprecedented” amount of merchandise. “First, retailers significantly overestimated consumer demand when it made inventory decisions for 2022,” UBS analysts led by Jay Sole said. “Second, consumer tastes have changed in a way which has surprised retailers. The consumer wants more ‘dressy’ items and less activewear. Thus, retailers are carrying not only too many goods, but also goods in categories which aren’t performing as well as expected.” Off-price retailers, a category that includes TJX Cos. TJX, +1.54% and Burlington Stores Inc. BURL, -0.25%, may also have too much merchandise, according to UBS. Retailers are trying to cancel orders, but analysts say inventory levels have likely not peaked. “We have a bearish view on consumer demand and thus expect the industry adjustment to be more expensive than many think,” UBS said.

This article was originally published by Marketwatch.com. Read the original article here.

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