Have you ever noticed how stores run out of hot merchandise in December, especially toys, well BEFORE Christmas approaches?
One reason is that stores do whatever they can to sell off and not restock their merchandise through December 31st, because anything they do not sell by the end of the year will then be considered assets, and anything they do sell are expenses. From one website I read, “At a period end, inventory that was not sold during the period is shown as an asset on the balance sheet (Merchandise Inventory) and inventory that was sold is shown as an expense on the income statement (Cost of Goods Sold).” It’s in a store’s best interest (financially) to run out as much as possible before Christmas.
A private business owner friend shared this with me a couple years ago. He says he waits to buy new merchandise until the new year because anything he has that doesn’t sell by December 31st he has to pay taxes on. I believe him. Notice how many CDs and books that are listed on amazon.com and barnesandnoble.com right now that don’t have a release date until January sometime? I’m sure there are other reasons – but the merchandise tax is potentially one of them.
It would seem logical that until Christmas is over, stores would maintain a high stock of inventory – especially high-demand Christmas gift items – until Christmas Day. That way they’d boost their sales. However, if stores do not sell off their goods by the end of the year (which is of course, so close to Christmas), they are considered assets and are taxable. And truthfully, more shoppers do their shopping on Thanksgiving weekend than during the last days before Christmas. Stores have to count on the early buyers – that’s why they offer such great “early bird” deals (move the inventory as early as possible!).
Last year for Christmas I thought about buying my daughter Heidi a Rapunzel dress from Target, which had been priced at $19.99 for weeks and was sold everywhere. I procrastinated and didn’t decide to get it until the week of Christmas. Guess what? No store had it anymore. I ended up searching frantically and found one on ebay.com for around $30 (more expensive because it was in-demand!). I ordered it just in time – it came in the mail ON December 24th. Heidi loved it, but I decided never to do that again!
This weekend – Black Friday weekend – I did some online browsing of store websites and saw that many items have actually run out already. A cute Disney “Brave Merida” pajama set on the Disney Store website that I wanted to buy had sold out on Black Friday. I emailed the Disney Store about it and they said that the item will no longer be available. In their email to me, they said “While we make every effort to anticipate the inventory requirements of our Guests, merchandise may sell out at different rates. Regrettably, this is very difficult to forecast.”
I went to amazon.com to find similar pajamas, and a Brave Merida one I had my eye on yesterday had sold out of my daughter’s size TODAY! I also noticed several other pajamas selling out in various sizes, so I grabbed the next size up (still available) and another pajama while they were still available.
I’m suspicious that there are many ebay sellers out there who are grabbing up “hot” merchandise and selling it for a markup in their online stores. This is another possible reason for the “lack of inventory.” Heck, if I were a full-time ebay seller I’d probably do this. Unfortunately, it makes things more costly and harder to attain for regular consumers like many of us.
Do all of your Christmas shopping NOW. Believe me, the best stuff will sell out soon if it hasn’t already. If there’s something you’re thinking about getting, buy it now – don’t wait. It may not be there later!
I would love to hear comments about this…from business owners or accountants who better understand how the taxes work, and consumers who have experienced what I’ve experienced!