Wal-Mart cutting orders as merchandise piles up at stores

Target Inventory

In the second quarter, U.S. inventory grew at 6.9% and U.S. sales grew at about 2%. In the same quarter a year earlier, inventory increased 3.6% while sales rose 3.8%. Target Corp. stores and Dollar General Corp. held their second-quarter inventory gains to about twice the rate of sales growth versus triple the pace at Wal-Mart.

Bill Simon, chief executive officer of Wal-Mart’s U.S. division, said last month that inventory increased due to “softer than anticipated sales trends, the delay in summer weather and timing shifts in the receipt of merchandise for back-to-school and the upcoming holiday season.”

Through yesterday Wal-Mart had gained 11% this year, compared with a 19% advance for the Standard & Poor’s 500 Index.

Holiday Merchandise

Even as Wal-Mart seeks to clear its inventory, holiday merchandise is showing up early at stores in states including Illinois, Texas, California and Colorado, according to workers at those locations. Some of them said there is already insufficient room for existing merchandise, forcing them to put the seasonal goods out as soon as they arrive -- about a month earlier than usual.

At a store in Boothwyn, Pennsylvania, on Sept. 14, pallets of Christmas tree lights sat in the middle of an aisle beside dozens of unopened cardboard boxes of Halloween decorations. A 28-inch light-up penguin was being sold for $19.98 beside plastic jack-o-lanterns selling for $1.

It’s a similar scene in Hurst, Texas, said Donna Kennedy- Medford, who has worked at the store for two years.

“This year, there’s more earlier than last year,” she said of the Christmas items. “We have some of it in the back, and some of it has been put out on the floor in a haphazard fashion.”

Shelf Stocking

Wal-Mart is already struggling to keep shelves stocked, in part because stores lack the manpower to move items to sales floors from back rooms and shipping containers in parking lots. The U.S. workforce at Wal-Mart’s namesake and Sam’s Club warehouse chains fell by about 120,000 employees in the past five years, to about 1.3 million, according to regulatory filings. In that time, the company has added more than 500 U.S. stores through July 31.

Because back rooms are often full, seasonal merchandise such as Christmas decorations sometimes must be moved directly to the sales floor, said Barbara Gertz, who has worked as an overnight stocker at the Wal-Mart store in Aurora, Colorado, for almost five years.

“The bulk of the freight doesn’t usually come until two weeks before Black Friday,” said Gertz, a member of OUR Walmart, a union-backed group seeking to improve working conditions at the chain.

This year is different, Gertz said.

“The aisles in the back room are so backed up with stuff,” she said. “We brought three pallets of Christmas trees out to the garden center. We usually do that in mid-October. We’re filling it up pretty quick for only being mid-September.”

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