Walmart’s order cancellation hurt Bangladesh Apparel Industry

Walmart Inc. recently announced that it had canceled orders worth billions of dollars in an ongoing effort to match inventory levels with anticipated demand and to lessen its exposure to specific products that have lost favor with buyers on a budget.

The world’s economy is unstable as a result of the conflict between Russia and Ukraine following the pandemic coronavirus. The food industry is experiencing rising inflation. The World Bank reports that there has been an 81 percent increase in food prices in 153 different nations. Its detrimental effects are equally noticeable in wealthy nations. The garment industry has also been impacted by the uncertainty of the global economy.

According to Walmart executives, the business has sold out the majority of its summer seasonal inventory in preparation for the next holiday shopping season and back-to-school season, which has already started in many parts of the South. The company is progressing in right-sizing its inventories, according to executives, but it will take at least a few more quarters to correct the network imbalances. According to data from Michigan State University, Walmart’s seasonally adjusted days to flip inventory decreased from 46 in the first quarter to 44 in the second. According to Jason Miller, associate professor of logistics at the university’s Eli Broad College of Business, this indicates that sales are beginning to surpass order arrivals.

In the meantime, Walmart, the biggest retailer in the world, has started to hurt the Bangladesh apparel market. Walmart has already canceled several orders, according to the executives of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). The clothing business is impacted by it.

According to BGMEA executives, the owners of several industries have informed the organization about Walmart canceling orders. Additionally, BGMEA communicates with the member factories. It is kept track of people whose orders are being canceled.

In the meantime, the cost of producing clothing has gone up by at least 20% as a result of the unusual rise in fuel oil costs. Owners of garment factories are struggling to find solutions to deal with the rising prices.

Walmart made its remarks when it released fiscal second-quarter earnings, which were far better than the disastrous fiscal first-quarter figures. Adjusted earnings per share of $1.77 outperformed the consensus estimate of $1.60. When currency movements were taken into account, revenue increased by 8.4% year over year to $152.9 billion. Operating income of $6.9 billion was 6.8% less than it was during the same time last year. Walmart predicted that net sales will rise 5% year over year during the third quarter of the fiscal year. Additionally, it forecasted a 9% to 11% reduction in adjusted profits per share and a decline in operating income of 8% to 10% year over year.