Bulging warehouses mean lean times for longer for US, European companies

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Lean times faced by many US and European companies may last longer than expected as they try to sell off their bulging inventories in an economic climate where demand is stalling

For London-listed Coats Group

CEO Rajiv Sharma was looking forward to a burst in orders once customers emptied their warehouses, but he said during an analyst call on Aug. 1 he couldn't predict the timing and scale of that recovery until the fourth quarter. "Excess savings that consumers have built since the pandemic began are draining, and we think all of these excess savings could be depleted by year-end or early next year."

The U.S. inventory-to-sales ratio was 1.4 in May, up from 1.33 a year ago, which means retailers, manufacturers and wholesalers have more inventory than they can sell at a higher rate than a year ago, she said., said hopes destocking would be over by end-June was overly optimistic.

 

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