Wal-Mart shares dip on report it is cutting orders
(Reuters) - Wal-Mart Stores Inc (WMT.N) shares fell 1.5 percent on Wednesday after a report by Bloomberg News said the retailer is cutting orders with suppliers this quarter and next quarter to address rising inventories.
The report said that last week, an ordering manager at the company described the pullback in an email to a supplier, who said other suppliers received similar messages.
"The story is completely inaccurate," said Wal-Mart spokesman David Tovar. "Merchandise goes up and down at stores every day."
Wal-Mart shares, a component of the Dow Jones industrial average .DJI, fell as much as 2.9 percent after the report was published on Wednesday before closing 1.5 percent lower at $74.65 on the New York Stock Exchange.
Bill Simon, the chief executive officer of Walmart U.S., the company's largest division, said in August that inventory in his U.S. division jumped 6.9 percent that quarter, citing softer-than-anticipated sales, a delay in the arrival of warm summer weather and shifts in the timing of when it received back-to-school and holiday merchandise.
"While we're not concerned about the quality of the inventory, it will continue to be an area of focus in the coming months," Simon said on the company's conference call after it released quarterly earnings on August 15.
Some companies that supply to Wal-Mart have already said or hinted that the retailer was decreasing certain orders. Elizabeth Arden Inc (RDEN.O), for example, said on August 8 that Wal-Mart ordered less than it had anticipated, especially in June.
Still, the retailer has been forecasting better sales. Simon said on September 11 that he expected sales to improve in the second half of the year after his chain posted declines in sales at stores open at least a year - better known as same-store sales - in both the first and second quarters.
Tovar was quoted in the Bloomberg story as saying the order pullback is not "across the board" and is happening "category by category."
"In some cases, we're going to be taking less, in some we're going to be taking more," Tovar said in the Bloomberg story.
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