More companies are finding themselves with too much product as supply chain snafus finally work themselves out at the same time that consumers pull back spending amid inflationary pressures. That could hurt their bottom lines – and share prices. Companies are feeling whiplash. Supply chain issues that hindered growth have started to be mitigated, meaning normal production rates can resume. But that return to normal output comes at the same time consumers are shifting spending from goods to services as Covid-era restrictions are rolled back or are reducing spending all together due to concerns around inflation and a potential recession. Rising inventories can sometimes signal companies will use discounts or other promotions to move inventory. That typically will hurt profitability. Trivariate Research put together a list of companies to watch based on their inventory-to-sales ratio. The firm screened for companies with the biggest changes in this ratio between the second and third quarter. Among the companies included is Dick’s Sporting Goods . The retailer was considered a pandemic winner as people turned from closed gyms and workout classes to equipment that could be used in homes or outdoors. The company had previously warned of potential slowdowns following the pandemic-induced spiked in sales. Stanley Black & Decker , known for its industrial tools, is also on the list. It’s another company that consumers flocked to during the pandemic as they focused more on their homes during economic shutdowns. Intel and Micron , two semiconductor companies, have the largest market caps of the names on the list. Both have reported falling demand for microchips, with the latter announcing plans to cut production to combat oversupply. Micron is a major supplier of memory chips for PCs and smartphones, and the company anticipates lower demand for these products. — CNBC’s Michael Bloom contributed to this report.
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