Motley Fool Money Retail's Inventory Problem
May 18, 2022
Bill Mann, a Senior Analyst at Motley Fool, dives into the inventory crisis plaguing major retailers like Target and Walmart. He discusses why their inventory missteps caught investors off guard and how Lowe's is managing to thrive amidst these challenges. Tim Beyers chats with Jayshree Ullal, CEO of Arista Networks, about her company's efforts to diversify revenue and clear up investor misconceptions. Together, they shed light on the importance of strategic communication and innovation in today's retail and tech landscapes.
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Retail Inventory Issues
- Major retailers like Target and Walmart are facing significant inventory problems, impacting their stock prices.
- The struggles come despite positive consumer spending reports from other companies like Visa and Amazon.
Target's Inventory Miscalculation
- Target's CEO, Brian Cornell, admitted to misjudging inventory, leading to a stock drop comparable to 1987.
- This contrasts with their usually strong track record in merchandise, especially apparel.
Target's Inventory Valuation
- Target uses the "last in, first out" inventory valuation method, meaning the most expensive items impact cost of goods sold the most.
- Chris Hill expresses surprise that Target didn't address the inventory issues sooner.