CFOs Confront Holiday Shipping Snarls by Ordering Early, Shrinking Packaging

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Finance chiefs say they are helping companies navigate supply-chain logjams

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Retailers having excess inventory in 2020 after temporarily closing brick-and-mortar locations to comply with virus-related restrictions may have stemmed from the shortage, according to Craig Bailey, associate principal at the business advisory firm.

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Mr Bailey said industries grew 9% overall, indicating an uptick in prices and companies refilling their shelves in response to higher consumer demand. Hackett’s total data set includes 910 companies.

According to Mr Bailey, during the second half of this year, retail inventory levels are likely to remain flat, as companies face supply-chain impasse and rising consumer demand.

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Black Friday has historically marked the start of the holiday shopping season for many American consumers. This year, jammed ports and construction delays have forced companies to tweak their holiday playbooks to get inventory at the door. Chief financial officers, in particular, have helped their companies meet consumer demand while keeping supply-chain costs under control. CFOs are taking some steps to navigate the current environment.

Tracy Travis, CFO of New York-based beauty retailer Estée Lauder Cos.,

On buying inventory ahead of time from the November 2 interview:

“We had anticipated some earlier this year and so we had already ordered some of our raw materials and some of the packaging. We did production earlier so that we can get the first products in our distribution centers specially for this holiday. So when our retailers arrived, especially in the US, we could have shipped some of our products earlier for the holiday. We were able to do this because we received the product earlier than usual. And so we’re trying to anticipate some disruptions.”

Mandy Fields, CFO of Oakland, California-based makeup and skin care company Elf Beauty Inc.,

On selling holiday gift sets for less than a November 3 interview:

“We wanted to prioritize our core assortment, and ensure that we could meet the demands of our customers based on our core core driving product. Also, if you think about containers and weights and all that, and [measuring and planning how many products can fit into a container]-Taking out that holiday product would take many more containers than taking out our normal everyday product. And so we were able to really take the capacity by not cubing the holiday product. ,

Julie Whelan, CFO of Williams-Sonoma Inc., a San Francisco-based home goods retailer.,

On planning for supply-chain hiccups in 2022 from its November 18 earnings call:

“We’re already thinking about next year and what it might be on the horizon and how do we approach some of those things. It’s also an advantage that we have multiple distribution points in the United States, so We can bring goods into many ports, which a lot of people can’t do without spending a lot of money… We are also opening and sourcing in other parts of the world we have sourced the largest quantity ever. And so whether it’s Mexico or Brazil, we’re looking at those markets very strongly and see opportunities in those markets.”

Michael Hartshorne, Group President and Chief Operating Officer at Ross Stores, a Dublin, Calif.-based discount retailer Inc.,

On overspending on shipping via sea freight from the earning call of 18 November:

“On the freight front, we have taken a number of actions to prepare ourselves for the holiday sales period, including adjusting our ordering times. We have chartered our own ocean liners, and we want to ensure We have enough sea freight to carry the cargo. You can certainly see that in our margins for the quarter. Our merchant margin was impacted by the ocean freight that we are going to offset. Merchant margins were down around 40 basis points. I won’t comment on the impact in the third quarter. Right now the congestion is focused entirely on port and port outflows.”

Scott Lipsky, CFO of Abercrombie & Fitch Company.,

On ordering inventory ahead of time, from a November 23 interview, a New Albany, Ohio-based apparel chain:

“We have further ordered some of our inventory. But we caught up with the closure in Vietnam later this summer. So we continue to leverage a variety of tools to get that inventory here during the holiday season. We’ve seen a good inflow of inventory here in November, starting to see that West Coast Ports accelerate a little bit in getting inventory through the port. At this point we are realizing that we can minimize the impact on sales. [the fourth quarter] As inventory flows in. ,

Kristin Broughton at [email protected]

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