Howard Davidowitz Inventory Quotations

There is a high likelihood of lower prices, ... The department store segment is a supplier's worst nightmare. Department stores demand more allowances from vendors, they want to be able to return inventory if it doesn't sell well. A Federated-May merger could be an even worse scenario for the suppliers.

Kmart said it closed its worst performing stores because it couldn't maintain inventory once its vendors cut themselves off. Now that the stores are shuttered and inventory is up, Kmart is still doing less business than before. The company is still losing money and market share. I'm not sure the company can get past Christmas.

What happened in the third quarter is that retailers controlled inventory and expenses tremendously. So expect to see pretty good gross margins and expect to see inventories down. Put it all together and earnings will be fair.

Also, most big retail chains placed their Christmas orders months ago and the Christmas inventory was already in the pipeline before (the) SARS (outbreak),

I'm concerned about what the markdown exposure will be to overall sales, ... Cleaning up inventory is a big issue and it's not easy to fix.