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Bloomberg reports that Walmart "is cutting orders it places with suppliers this quarter and next to address rising inventories the company flagged in last month’s earnings report." Bloomberg says it has seen an email from the company to a supplier in which the cuts were described.

According to the story, "U.S. inventory growth at Wal-Mart outstripped sales gains in the second quarter at a faster rate than at the retailer’s biggest rivals. Merchandise has been piling up because consumers have been spending less freely than Wal-Mart projected, and the company has forfeited some sales because it doesn’t have enough workers in stores to keep shelves adequately stocked."

Indeed, in a separate story, Bloomberg suggests that the reason that Walmart decided to convert 35,000 part-time employees to full-time status was to deal with the inventory issue: "Wal-Mart is adding staff to please its customers, not its employees, its critics, or the government. It’s worried about losing individual item sales and, ultimately, alienating its customers altogether. In the long run, the only way a brick-and-mortar store can survive is by having the things people want to buy at the moment they want to buy them. Amazon, with its endless ambition and relentless customer focus, is Wal-Mart’s long-term competition."

While Walmart spokesman David Tovar tells Bloomberg that the order pullback isn’t “across the board” and is happening “category by category,” in a subsequent interview with CNBC he walked that back, saying that "the entire story is misleading" and the claim that Wal-Mart is cutting orders because inventories were piling up is "completely false." Tovar added "that the company has hundreds of inventory categories and that it is constantly managing inventory levels based on consumer demand in different markets."
KC's View:
Reminds me of the definition of a "gaffe" in politics - it's when someone actually tells the truth.

Seems to me that there are two ways to deal with this story. One is to deny its accuracy. And the other is to embrace it, saying that the availability of data makes it possible to do things like this ... and that this is the mark of a smart, sophisticated retailer. But by going into denial, Walmart puts itself on the defensive, when it could have ended all the stories and speculation by making the story work in its favor.