Walmart Cutting Orders To Stem Inventory Tide

In a Pennsylvania Walmart, the Christmas lights were already being put out on store shelves earlier this month, right alongside still packed Halloween decorations. Elsewhere, Christmas trees were being put out in the garden center weeks earlier than normal. It's not the holiday creep, though. The stores just had nowhere else to put them.

No surprise, then, that Walmart (NYSE:WMT) is cutting orders with certain suppliers for the third and fourth quarters to counter its growing inventory problem. Stockroom supplies have been piling up as shoppers continue to hold on to their money tighter than the retail giant predicted.

The cuts were revealed in a Sept. 17 e-mail from a Walmart ordering manager to a supplier, which was revealed to Bloomberg by an unnamed source. Walmart denies there's anything out of the ordinary. "We are managing our inventory appropriately," Walmart spokesman David Tovar told Bloomberg in a phone interview. "We feel good about our inventory position."

The order cuts aren't happening equally across all categories, he added in an earlier interview. Some orders are being increased, some are being cut.

What they may not feel so good about is missing out on some sales because, despite the buildup, stores don't have enough staff to keep shelves fully stocked. Especially with holiday sales already expected to see the smallest increase in four years, no one, not even the big boys, can afford to slip up.

Walmart will be adding significantly to its work force for the holiday season, which should help, but part of the problem the retailer faces is that large stocks of that merchandise is already flooding in.

"This year, there's more earlier than last year," Donna Kennedy-Medford, a worker at a store in Hurst, Tex., told Bloomberg. "We have some of it in the back, and some of it has been put out on the floor in a haphazard fashion."

Hence giant light-up penguins standing alongside plastic jack-o-lanterns in some stores. It's getting so bad in some locations that normal items are being displaced by the seasonal merchandise, causing problems for shoppers who just want to pick up some essentials rather than start planning their Christmas light display.

"The biggest question I have is: How can they put out this stuff two months early and they can't even have regular stuff out?" asked Troy Hollar, a regular customer who couldn't find the baby wipes or paper products he was looking for. "Most average people wouldn't consider buying Christmas stuff for a long time. That's just wasted space."

For more:

- See this Bloomberg story

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