Retailers face fresh threat posed by mountain of unsold stock

Linda J. Dodson

Industry analysts predict that it will take about three years for the sector to match last year’s level of sales and up to 18 months to unclog the supply chain. On top of that, this year alone, clothing and footwear spend is forecast to decline by £11bn in 2020, which represents a fifth of the UK fashion market, according to research firm GlobalData.

Primark, which was forced to shut all 367 shops, is sitting on £1.5bn of unsold stock. It has admitted that profits will take a hit of £284m this year due to excess inventory. George Weston, the chief executive of Associated British Foods, the retailer’s owner, says the problem is two fold.

The chain has a portion of stock, currently in stores, that “we will have to discard to clear either because it got creased or because it got sun damaged” as well as most of it is seasonal lines that will not sell.

He also has to find extra space for products such as T-shirts, towels and sheets, which can still be sold without having to be discounted, plus new items for autumn and winter, provided that shops reopen.

“It is an issue to be solved,” he says, although the business has secured extra warehouse capacity, for now.

There is money to be made, too. Last week, Laura Ashley’s new owners, Gordon Brothers, agreed to give administrators at PwC a licence to continue selling its wares so the stores can recover cash when they eventually reopen. They bought the brand, the archives and intellectual property, but not the stores.

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