US-inflation: Consumers cut back on purchases and retailers cut prices

U.S. consumers worried about the path of inflation and cutting back on clothing purchases are prompting retailers to cut prices to clear inventory.

Retail chain Gap was the latest to report a plunge in second-quarter apparel sales, announcing yesterday that net sales fell 8 percent from a year earlier to $3.86 billion.

In August, the managements of American giants Walmart and Target offered big discounts and price reductions on clothing items.

Gap “is taking action to sequentially reduce its inventory, as well as realign our collections to better serve the changing needs of consumers,” Katrina O’Connell, Gap Inc.’s chief financial officer, said in a statement.

Big discounts on clothing items, especially at Old Navy, reduce the company’s profit margins. Old Navy stores cannot sell specific sizes and styles, while Gap tries to promote a balanced offering of specific clothing items based on consumer demand, according to O’Connell.

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