Here's How Much Walmart's Inventory Situation Actually Improved Last Quarter
Walmart's (NYSE: WMT) inventory woes from earlier this year are winding down. That's the takeaway from the company's recent earnings call, anyway. The shares rallied more than 6% after CEO Doug McMillion commented that "we've made good progress to improve our inventory position," and then went on to illustrate how. And to be fair, the world's largest brick-and-mortar retailer does seem to have an improving handle on its aging, decreasingly marketable merchandise than it did just a couple of quarters ago.
But if you think the company's inventory situation is no longer a glaring liability, think again. The matter could still up-end Walmart stock.
Walmart (like many other retailers) aggressively restocked store shelves late last year and early this year, anticipating a post-pandemic consumerism recovery that never quite lived up to expectations. It's a problem simply because much of its merchandise is seasonal. The longer it sits on a shelf, the more difficult it becomes to sell... even at a discount. Moreover, not only do these goods take up valuable room, they also represent money that could otherwise be used to purchase new, more marketable merchandise. That's a big reason Walmart's profit margin rates have been shrinking of late.
Source Fool.com
