Don't Ignore This Glaring Problem for Retailers
It was no surprise most retailers' first-quarter results were poor. Although some consumer staples names like Walmart and Kroger benefited from the coronavirus-related lockdowns and the subsequent pantry-stocking they prompted, most non-essential stores were closed by sometime in March. There just wasn't as much business to be done.
Retailers' second-quarter reports probably won't be any better. Indeed, although most brick-and-mortar names are reopened in such a way that allows for proper social distancing, they could be even worse than Q1's year-over-year sales comparisons.
Revenue isn't the only concern investors should have on their retailing radars right now. Sales could actually start to recover somewhat from here, in fact, as stores start to figure out how to connect with consumers. Perhaps far more important to shareholders at the moment is the burgeoning levels of inventory that was already on hand and/or couldn't be cancelled in the meantime. The echoes of this problem could ring for several more quarters.
Source Fool.com
