The finding from Morgan Stanley that retailers and manufacturers are ordering historically low levels of goods provides standing to a report from KeyBanc last week. The ‘trucking winter’ is coming thanks to high inventory On the other hand, Cox Automotive reported that wholesale used-car values declined in September year over year for the first time since May 2020. New and used vehicle prices make up some 80% of core goods inflation, according to the Morgan Stanley report. The automotive industry’s slow recovery to pre-pandemic inventory levels is bad news for inflation.

Analysts identified machinery, electrical equipment and the automotive industry as facing low to moderate risk from the inventory chaos. Some industries are still experiencing supply chain disruptions.

Home furnishings and personal electronics are also at elevated risk. Maxx’s parent company as some of the few retailers who could soar in the present environment, because they can take advantage of other stores looking to shed inventory. As a result, they boosted Ross, Burlington and T.J. This dynamic will weigh heavily on margins and fuel the earnings slowdown we are predicting.”Īnalysts highlighted apparel as one sector reporting “alarming” growth in imports. We believe many will turn to aggressive discounting to solve their inventory problem which is likely to spark a ‘race to the bottom’ as companies attempt to cut prices faster than peers and move out as much inventory as possible. “Faced with a glut of inventory, companies will need to decide whether they want to accept high costs to continue holding inventory, destroy inventory, keep prices high and take a hit on the number of units sold, or slash prices to stimulate demand. “Almost half of respondents say that their inventory is higher and ordering is lower going forward - which firmly indicated an over-inventoried/de-stocking condition,” wrote Ravi Shanker, who is Morgan Stanley’s lead transportation equity analyst. Net inventory levels are also unusually high. Ordering levels are down 40% year over year. In the goods industry, Morgan Stanley said there’s a 19% discrepancy between inventory and sales growth.Ĭompanies with high consumer exposure have slashed their ordering - even though this time of year tends to be when retailers are beefing up their warehouses ahead of the holiday season.Īccording to the Morgan Stanley Shipper Survey, in which some 100 corporations regularly share their transportation needs and macro expectations, net ordering levels have reached the lowest point in the survey’s 12-year history.

Morgan Stanley highlighted retailers like Best Buy, Gap and Williams-Sonoma as most exposed to these inventory risks. Thank skidding demand amid a glut of inventory. A Monday report from Morgan Stanley’s equity team said inventory is a “key risk” to retailers and electronic goods manufacturers.

Rolling sky all levels