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  • paywithbalance paywithbalance Sep 8, 2006 11:33 AM Flag

    Major Red Flag - Inventory Problems

    Part of the reason that there is high inventory is that their direct sourcing program is kicking in to a larger extent and some items have arrived early. They mention this in the conference call.

    They also mention how clean they were of inventory at the end of last quarter. The items now on sale are NORMAL and let me tell you, they do NOT have many sizes in them, especially my size! In many cases they don't have the item at all (boo).

    At the store level they do show a lot of inventory - stores are very full. However, they also seem to be sell through this stuff. I visit California stores often, up and down the coast. They are busy.

    I am not concerned about high inventory at this point.

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    • <Part of the reason that there is high inventory is that their direct sourcing program is kicking in to a larger extent >

      Exactly! But what you fail to understand is they have taken on MUCH MORE inventory risk. By doing so they have set themselves for major trouble if the inventory does not move.

      The web site show an unprecedented level of discounting. In addition to the stock piles of inventory in the stores.

      They will go the way of CHS and JOSB --- poor inventory kills retailers

      • 2 Replies to taxevader_1999
      • Please do not tell me that I "fail to understand" anything. Inherent in the direct source initative is inventory risk. This is true for every retailer who undertakes it. It is also a fact that direct sourcing results in higher margins.

        There is nothing new here. All retailers take risk during expansion. All inventory is suspect until it is sold. The numbers indicate that CWTR has consistently presented inventory that their customers want. Unless you have evidence that the goods are failing to sell you have not presented anything new and should not tell people what they do and do not understand.

      • I absolutely disagree about the Outlet and the number of items on sale.

        As I have mentioned before, I've been a Coldwater Creek re-seller on eBay, and picked up about 99.5% of my inventory from their Outlet section online. I know that outlet better than just about anyone out there. I know what time of day their servers update, how to bypass what you can *see* that is available online and go directly to pages to find things prior to their appearing in the outlet by going to URL's not linked from visible pages...... Seriously, I know of only two or possibly three other people who could possibly have as much knowledge of the inner workings of their Outlet besides people who actually work at CWC.

        When I used to re-sell their things, back when I could get them cheaply enough to make it worth my time, it was not uncommon for them to have 50% off sales at the same time they had free shipping codes floating around there. They've really wised up. No longer do they allow those things to overlap.

        Their Final Call section on their outlet is really something of a farce. They have items that are supposedly the last ones available, but the next day, there the item will be again. For those who don't watch it daily, it's a nice marketing ploy.

        I can tell you how I got started eBaying their things. I had an event coming up for which I needed a new dress back in '99. I always liked CWC things but they were too spendy for me. I got the bright idea to look on eBay for a NWT CWC item. I found a dress I liked that was going for around $36, and was pretty excited. I wanted to see if I could find it on the CWC website to see what it retailed for originally, and lo and behold, there it was in their outlet for $12! I thought to myself, "If they can do that, I can do that!" I ordered five of them, gave one to my Gram for Christmas, kept one, and sold three of them at $35, $40, and $45 each.

        Look at their outlet now. You simply won't see those deeply discounted items. The things at the big 70% off mark are typically in petite sizes or are are smaller pieces like shells, not outfits or dresses or jackets. There are always a smattering of $12.99 jackets up on Final Call, but they get snapped up by re-sellers going through the back door links before they are available to much of anyone else.

        My average cost per item used to be in the $8 range. That was for dresses and jackets. I could have free shipping on an $800 order. I did order a few things last week for the first time in nearly two years, and my average cost per garment was $15.44. Considering my eBay and Paypal fees, I'd need an average sale price of $37 to double my money, whereas that used to nearly quadruple my money.

        The Outlet is far more marketing-oriented than clearancing-oriented, IMHO. It's a mind game they are playing with consumers. Far too many things that started out at $89 are only marked down to $59, and for a trule "Outlet" type shopper, that's simply not a deep discount.