“The fabric looks like it’s been there for a while,” she said, referring to a short-sleeve pink blouse on the rack.

Retailers including Express Inc and Gap Inc have held on to older merchandise, from as far back as last holiday season, with the hopes of selling the inventory this fall.

“If you lower the price enough, you’ll get rid of it,” said Eric Beder, chief executive of Small

At risk are retailers’ margins during the critical holiday shopping season and their efforts to be the go-to location for trendy fashions.

Jessica Ramirez

hoppers are buying to wear right now,” Ramirez added, so having items that customers immediately want and need is crucial.

Gap declined to comment.

Shopper demand has put a strain on apparel retailers throughout the year, boosting inventories and forcing retailers including Gap, Victoria’s Secret and Kohl’s

After receiving holiday items too late for 2021, the retailers also began ordering seasonal items earlier in 2022 to avoid supply-chain mishaps, but found themselves struggling with lower demand from customers strained by rising costs of gas and groceries.

Express reported an 8% fall in quarterly comparable sales on Thursday, blaming a drop in demand from lower income shoppers and fashion misses in its women’s apparel business.

“We are already working to realign our assortments based on customer purchasing behavior, re-calibrate our opening price points, and address opportunities in our women’s business,” Express Chief Executive Officer Tim Baxter said on an analyst call.

The company, which was offering holiday discounts of 30%-50% online and in-store earlier this week, said inventories were up 10% in the third quarter and would improve towards the end of the year.

Total

Deals since October and over Thanksgiving weekend were up in both frequency and discounting depth, including from clothing retailers, according to research from Jane Hali & Associates. Some started promoting at higher levels earlier than last year.

General apparel was the most discounted category between Thanksgiving through Cyber Monday, according to Salesforce

‘Margin drain’

Gap also warned investors in November that carrying summer merchandise into the fall was a “margin drain,” and now some of those styles are still on Gap’s racks, according to store checks.
Gap.com on Tuesday posted discounts of 60% on basic crewneck t-shirts. The promotion excluded trendier styles like faux leather pants.

In mid-November, Gap Chief Financial Officer Katrina O’Connell said it expects to enter 2023 with lowered inventories, even if it must slash prices. She said that holding on to unsold inventory would “use up cash” in the short term and that the company is focused on clearing old merchandise by the new year.

o be sure, getting rid of old clothing by 2023 could help Gap and Express free up space for trendy merchandise that shoppers are willing to buy and will cut costs on warehousing.

Gap’s clothing stock for the third quarter ended Oct. 29 was 12% higher, with 9 percentage points being what Gap executives call “pack and hold” merchandise — stored away “slow-turning” basics, including tee-shirts and shorts, that would eventually return to sales floors.

Gap’s profit margin’s fell to 38.7% in its third quarter from 41.9% a year earlier, significantly impacted by markdowns. Wall Street expects Gap’s margins to rise to 34.61% in the holiday quarter from 33.66% last year.

 ​Express reported third-quarter gross margins of 27.8% on Thursday, down from 33.2% a year earlier.