Some retailers, including teen clothier Abercrombie & Fitch Co., started building up inventories in anticipation of the back-to-school rush and a more upbeat mood in the fall of 2010. At the beginning of 2010, some retailers were caught with not enough merchandise on hand when consumers stepped up their spending after a year of economic uncertainty. Other retailers, including TJX Cos. Inc., which runs discounters Winners and Home Sense, cut inventory before the fall of 2010 to minimize markdowns as they anticipated further economic uncertainty in the minds of consumers.

Instructions

Write a memo comparing the two different strategies of each of these groups of retailers-those that were stocking up for fall like Abercrombie & Fitch and those that were cutting back like TJX. Include in your memo the advantages and disadvantages of each strategy and the likely impact on the gross profit and inventory turnover ratios.