When fashion companies have too much unsold stock, they often use discounts to clear it out and make room for new clothes. It’s not always an ideal solution. Discounts squeeze profit margins, and too many promotions can leave shoppers reluctant to pay full price again.
So when large numbers of stores in several countries closed through spring due to Covid-19—and many shoppers paused spending on non-essentials—clothing retailers found themselves with a big problem. They had a season’s worth of unsold clothing, plus orders they had placed months earlier still arriving at their warehouses. To solve the problem many are expected to rely on discounts, but some companies are taking a different path, choosing instead to stash their unsold inventory and try selling it next year once it’s in season again.
On a call with investors today, John Idol, CEO of Capri Holdings, which owns Michael Kors, Versace, and Jimmy Choo, said that’s the route the company will take with much of its summer inventory, which never even made it to stores. “We’re repurposing that for spring season next year,” he explained.
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