Rising sales put surprise dent in wholesalers' inventories Retailers may be stocking for holiday sales crush

November 09, 1996|By BLOOMBERG BUSINESS NEWS

WASHINGTON -- Inventories of goods at U.S. wholesalers unexpectedly dropped in September as climbing sales helped clear warehouses, government figures showed yesterday.

Wholesale inventories fell 1.3 percent during the month, helped by a large decline in inventories of nondurable goods such as drugs, apparel and raw farm products. In August, inventories dropped a revised 0.1 percent, previously reported as a 0.5 percent gain.

September's dip in wholesale inventories hints that many retailers are stocking up ahead of the busiest selling time of the holiday season. in Chicago.

Holiday sales will be the key to inventory rebuilding during the next few months -- and a gauge of economic growth in the period ahead. That's because brisk demand during the holidays will encourage companies to step up production, or increase orders, to refill their warehouses.

"When you outperform your plans, which we've been doing all year, inventories just don't get bloated," said Alan Zimtbaum, president and chief operating officer of Cost Plus Inc., an Oakland, Calif.-based seller of home-decor accessories.

If sales turn sluggish close to the end of the year, it won't bode well for growth in the first quarter of 1997. A lackluster Christmas would leave companies with stockpiles of unsold goods and little reason to produce -- or order -- new products.

September's wholesale decline was led by a 3.0 percent drop in stocks of nondurable goods, the government said. Stockpiles of big-ticket items were also down, though more modestly, as inventories of autos and parts fell 4.0 percent.

Inventories of lumber, other construction materials and furniture increased during the month.

The wholesale sales-to-stock ratio, which measures the time that goods sit in warehouses, fell to 1.27 months in September from 1.29 months in August. That's in part because wholesale sales rose 0.9 percent in September after declining 1.0 percent in August.

Pub Date: 11/09/96

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