Walmart is canceling orders to help it adjust to its inventory glut.
In a conference call with investors announcing second-quarter results, Walmart Chief Financial Officer John Rainey said the company had “cancelled billions of orders” to deal with the inventory buildup that had accumulated over the past few quarters.
Like other retailers this quarter, the big-box store found itself with higher-than-normal inventory levels as backorders from the first and second quarters have only recently arrived, adding to existing orders for the quarter. On top of that, consumers have shifted spending significantly away from discretionary categories, leaving Walmart with overspending in categories like apparel.
In addition to canceling orders, Walmart has also taken price cuts on low-volume categories. As a result, Rainey estimates that only about 15% of Walmart’s second-quarter inventory growth was “above optimal.”
“We feel much better about the second half of the year,” said John Furner, Walmart U.S. CEO and president. “As we speak, we still have inventory to process and draw from the backlog. So it’s going to take us a few quarters to do that.”
Furner said clearing excess clothing in the second quarter is “urgent” because some of the items are seasonal and will be less relevant once the third quarter begins.
Other retailers have reported higher-than-normal inventories in the first and second quarters for similar reasons. Target announced in June that it would take several steps in the second quarter to address excess inventory, such as introducing markdowns, removing excess inventory and canceling orders.
Orders from India, Vietnam, Bangladesh and other countries plummeted
Work stoppages, holidays, orders cut in half, income halved, personnel optimization… Recently, major manufacturing countries such as Vietnam, India, and Indonesia have lost their previous hotness and entered winter overnight. The production status of the factory suddenly deteriorated, and the survival pressure of employees also quietly increased. From queuing for half a year to clearing orders, from working overtime in full swing to working less and taking more breaks with nothing to do, what exactly happened?
Bangladesh: Orders fell 20% year-on-year, seeking loans from the IMF
After experiencing unusually strong order growth of more than 30% in 2021, Bangladesh, the world’s second largest apparel exporter after China, is now facing a decline in orders. Last month, Bangladesh became the third South Asian country after Pakistan and Sri Lanka to seek a loan from the International Monetary Fund (IMF) as its foreign exchange reserves shrank and its trade deficit soared.
General manager Hogg, managing director of Plummy Fashions, a supplier of Zara and former chairman of the Bangladesh Knitwear Manufacturers and Exporters Association, said that new orders in July fell by 20% year-on-year, and retailers in the European and American markets have either postponed finished product shipments or postponed shipments. orders, and some have reduced the size of orders. A large U.S. customer initially wanted to postpone a small shipment this month to December. Hogg said he believes the growth rate of Bangladesh’s garment exports will slow down to about 15% this year.
Vietnam: Shortage of orders is common, and more and more factories are on holiday
Unlike this time last year, every factory in Vietnam is full of confidence. They are grabbing workers everywhere and are busy expanding and increasing production capacity. Starting from August this year, there were suddenly and inexplicably more factories in the surrounding area that were on long holidays. For example, the famous Samsung Group has also announced in the past few days that it has lowered the company’s annual production targets. However, in fact, the factory has already implemented a four-day holiday and three days off to reduce production capacity.
In the second half of the year, many factories in Vietnam began to run out of orders and had to shorten production times, stop recruitment, and reduce labor force. Some factories are running out of orders, forcing them to recalculate appropriate labor plans, such as giving workers Saturdays off.
A person in charge of a Vietnamese factory said that the factory is still operating normally, but orders will be lost by September to October. According to the plan, companies will arrange for workers to be furloughed around the fourth quarter. The factory will suspend production for eight days during the National Day holiday, and then arrange workers to take Saturday off as appropriate to reduce overtime.
India: Export orders drop by 40%, Western countries reduce orders for next season
Data released by the Indian Ministry of Industry and Commerce show that the export volume of cotton yarn, fabrics, finished products, and handloom products fell by 19.49% to US$962 million in June 2022; the overall export of cotton textiles fell by 14.30% to 1.699 billion yuan.
Export orders for clothing and home textiles from the United States and Europe fell by about 15%-20% as Western retail brands faced slow demand. In Panipat, an important center for home textile production, there are signs that export orders have dropped by as much as 40%. It is reported that inflation and rising interest rates caused by the Russia-Ukraine war are the reasons for the economic recession and reduced export orders.
Industry sources said importers from Western countries have not only reduced orders for the next season but also pushed�, but Chinese companies are very honest and have ensured the supply of goods to overseas customers. By 2008, these foreign customers placed more orders at cooperative factories in China. By 2009, due to factors such as the fall in raw material prices , the profits of Chinese enterprises are actually quite large. Taking Boss Chang’s company as an example, the business volume increased by more than 20%.
Even in 2020, because my country controlled the epidemic relatively early, some orders originally produced in other Southeast Asian countries went to Chinese garment foreign trade companies, so “life is still OK.” But this year he feels a bit pessimistic. In discussions with peers, everyone generally believes that the decline has not yet bottomed out.
“Now we no longer talk about ‘profit’ with our international customers, we can only talk about the expected ‘loss’. Even if we know that we will lose 1.5%~2%, we are still willing to accept the order.” Boss Chang said when explaining the reason: The orders they undertake from large overseas customers are generally for a single basic style. In terms of processing difficulty and requirements for workers, they are not too high. Foreign trade companies are also relatively easy to do, so if they don’t lose too much, consider On the one hand, it is not easy to get a big customer. On the other hand, it is not easy to recruit skilled workers. You can only “bite the bullet” and accept it. If the production line stops, both customers and workers will run away. If you want to find another one, you can more difficult.
In response to the difficulties encountered by foreign trade companies in production and operation, the country has recently introduced a series of policies to ensure stability.
In particular, efforts are being made to help foreign trade companies grab orders and expand markets. Wang Shouwen, Vice Minister of Commerce and Deputy Representative for International Trade Negotiations, mentioned at the State Council’s regular policy briefing on June 8 that the current measures are to optimize and innovate online exhibitions. model, it is necessary to create national exhibitions, professional exhibitions, and characteristic exhibitions to help companies obtain more foreign trade orders. For small, medium and micro enterprises, we are encouraged to conduct face-to-face negotiations with foreign customers online within the country and ship products overseas for offline product exhibitions. Strengthen the interaction and mutual promotion between the online Canton Fair and cross-border e-commerce platforms to facilitate business transactions.
The off-season is an excellent time for business personnel to run the market and recharge their batteries.
Now that we are about to enter the off-season of August and September, textile enterprise business personnel should seize the time to move around.
The first is to visit customers and connect with them. After all, they take care of your business, so out of politeness, you should also look at them;
In addition, visiting customers during the off-season will impress them and make them feel that you are a caring person;
The second is to develop new customers. When we enter the peak season, there will be many people looking for customers, and competition from competitors is fierce, so it may be difficult to close business.
At the same time, I will also find some books or training courses to recharge my batteries. In business now, it is difficult to succeed based on integrity alone. You also need to learn more business skills and marketing strategies.
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