Inventories Weigh Down Retailers

(MoneyWatch)  For several major retailers, weak sales are leading to higher inventory levels, which is a position most merchants don't want to be in.

According to data compiled from Capital IQ (which isn't available online), multi-line and specialty retailers are sitting on $5.5 billion more inventory in the trailing 12-month period than in the same period last year. The data was derived from retailers' most recent quarterly financial reports.

On average, retailers amassed $30.5 million of more inventory than in 2007 -- all due to a pullback in consumer spending, which doesn't seem to be changing anytime soon. November sales were also dismal.

Some of the largest gains in inventory were posted by Circuit City with $323 million and Borders Group with $277.2 million. Gap showed an inventory gain of $230 million. Kohl's had $199.4 million while Macy's gained $111 million. Staples saw its inventories swell over $80 million while Belk's jumped $66.2 million.

When I visited several stores during the kickoff to the holiday shopping season, there was a lot of aggressive markdown activity, with sales resembling liquidation events. At Kohl's in Kingston, N.Y., for instance, shoppers sought bargain-priced items in every department of the store. The store-wide sale on Black Friday offered 50 to 60 percent off. The holiday sale continued this week with selected items up to 60 percent off.

What made Black Friday interesting was that shoppers weren't just loading up on gift items such as jewelry, sweaters and ties. They walked out of Kohl's, Macy's and Wal-Mart with frying pans and luggage.