Do they know something they are not telling us? As you’ll see below, Walmart, Target and other major US retailers are canceling literally billions of dollars in orders ahead of the upcoming holiday season. I’d never heard of such a thing before, and under normal conditions it wouldn’t make any sense. The holiday season is usually the busiest time of year for retailers, and at this time in 2021 there was a lot of concern that there wouldn’t be enough inventory due to global supply chain issues. But now everything has changed. All of a sudden, major retailers are feverishly canceling orders, and that would only make sense if a serious economic crisis were imminent.
For example, Walmart admits it has canceled “billions of dollars in orders” as we approach the upcoming holiday season…
John David Rainey, Walmart’s vice president and chief financial officer, said it had cleared most of its summer inventory, was reducing exposure to electronics, home and sporting goods and canceled “thousands of millions of dollars in orders” to readjust inventories. He said: “Our actions in the third quarter will allow us to make significant progress towards streamlining absolute levels and mix, which will allow our stores to be well positioned ahead of the holiday season.”
It is extremely strange that Walmart would decide to do something like this.
I recently had the opportunity to walk through a Walmart and there were a lot of inventory holes.
So what would make them suddenly cancel “billions of dollars” in orders they thought they would need for the holiday season?
Perhaps some enterprising journalist will be willing to ask them this question.
Meanwhile, we just learned that Target has also canceled “over $1.5 billion” in orders…
Target said it had reduced its “inventory exposure in discretionary categories” over the course of the second quarter by canceling more than $1.5 billion of orders in those categories and marking down products.
Target is much smaller than Walmart, so Target canceling so many orders is a big deal.
And it turns out that Kohl’s and Under Armor have also canceled a large number of orders…
Kohl’s has also withdrawn order receipts and increased promotions to overcome excess inventory.
“We’ve taken steps to address inventory, including increasing promotions, being aggressive in clearing excess inventory and removing receipts,” said Kohl’s Chief Financial Officer Jill Timm. on a call with investors.
Under Armor also said it made some proactive cancellations due to supply chain constraints to ensure “the right inventory arrived at the right time,” said interim president and CEO Colin Browne on a call with investors.
These retailers are obviously afraid of ending up stuck with massive amounts of inventory they can’t sell.
Do they think that economic activity in the coming months will be much lower than initially expected?
One corporate executive who actually publicly admits that he thinks a recession is coming is FedEx CEO Raj Subramaniam…
FedEx CEO Raj Subramaniam told CNBC’s Jim Cramer on Thursday that he believes a recession is imminent for the global economy.
“I think so. But you know, those numbers don’t bode well,” Subramaniam said in response to Cramer’s question about whether the economy is “going into a global recession.”
The CEO’s pessimism came after FedEx missed revenue and earnings estimates for the first quarter. The company also withdrew its annual guidance.
Unfortunately, it is well on its way.
I’ve been warning for months that the economic numbers were telling us there were big problems ahead, and now everyone can see it.
But unlike the “Great Recession” of 2008 and 2009, this time we’ll also have to deal with raging inflation, even as economic activity slows all around us.
In fact, the Wall Street Journal ominously warns that American consumers “are poised to pay even more this winter” as heating costs continue to rise to absolutely ridiculous levels…
U.S. utility customers, facing some of their biggest bills in years, will pay even more this winter as natural gas prices continue to rise.
Natural gas prices have more than doubled this year due to global supply shortages worsened by the Ukraine war, and are expected to remain elevated for months as the fuel is needed to light and heat the houses during the winter. The supply crisis has made utilities buy or produce energy substantially more expensive, and those costs are passed on to customers.
The cost of living has been rising much faster than our paychecks for quite some time now, and there is much more pain on the horizon.
I really like how Brandon Smith recently summed up the current state of the US economy….
A common refrain from people who criticize alternative economists is that we’ve been predicting a crisis for so long that “we’ll eventually be right.” These are generally people who don’t understand the nature of economic decline: it’s like an avalanche that builds up over time, then breaks and heats up quickly as it rolls down the mountain. What they don’t understand is that they are in the midst of an economic collapse right now, and they simply cannot see it because they have acclimated to the presence of snow and cold.
Economic decline is a process that takes many years, and while an event like the market crash of 1929 or the crash of 2008 may occur, these moments of panic are nothing more than the remnants left by the great ice wave fall that everyone should have seen coming well in advance, but refused.
This is so true.
We are already in the midst of an economic crisis, but things will get much worse in the coming months and years.
Walmart, Target and other big retailers are working very hard to prepare for what’s to come.
I hope so, because at this point it should be glaringly obvious to everyone that very difficult times are ahead.