1 Stock to Avoid Like the Plague
Apparel retailer Gap Inc (NYSE: GPS) is already down 55% this year. All of retail is having a tough go of it. The S&P Retail Select Industry Index is down about 30%. Like many retailers, Gap has a glut of inventory, but it may have additional deep-seated issues that could persist. Let's take a closer look at where the inventory issue comes from, what other challenges the company is facing, and what all this means for investors.
Pandemic stimulus and near-zero interest rates fueled consumer demand in the U.S. from the second half of 2020 through 2021. Suppliers couldn't keep up, especially as the world dealt with continued shutdowns due to recurring COVID waves. This mismatch created bottlenecks in the global supply chain, slowing down delivery and causing shortages all over the globe.
But, even as demand outpaced available supply, big buyers like Gap were able to get the inventory they thought they wanted. That all changed, though, when 2022 came around. Beginning in the first few months of the year, the Federal Reserve reversed its accommodative stance and began to raise interest rates to cool the red-hot U.S. economy.
Source Fool.com
