Cut in US retail orders points to troubled recovery

The recovery in the United States retail sector has been slower than expected, with big store chains said to be cutting orders despite the approaching Christmas season because of high inventory levels.

Apart from Wal-Mart Stores, which Bloomberg said had informed its suppliers about the pullback last week, Hong Kong apparel suppliers said global sportswear brand Nike and other US retail chains had also slashed orders for the next few months.

A major Hong Kong garment manufacturer who asked not to be named said Nike had cut its orders by more than 10 per cent.

Shirley Chan, the chief executive of YGM Trading, another major manufacturer for brands such as Aquascutum, Ashworth and Guy Laroche, said it had seen a drop in US orders in the past few weeks.

"Recovery in the US retail sector is confined mainly to a few major cities like New York and Boston, but is much slower in second-tier cities such as Dallas and Detroit," Chan said. "Retailers which replenished their warehouses earlier this year were too optimistic when placing orders and have now found their stocks piling up again."

Although Li & Fung, which sources merchandise for Wal-Mart, said it had not received cancellations from the US retailer, its share price fell to a four-week intraday low yesterday before rebounding to close at HK$11.42.