US Softlines Retail: Industry Inventory Levels Look Stable and Essentially In-Line With Demand

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US Softlines Retail: Industry Inventory Levels Look Stable and Essentially In-Line With Demand

Global Research

23 June 2026ab

US Softlines Retail Equities

AmericasIndustry Inventory Levels Look Stable and

Essentially In-Line With Demand Retailers, Specialty

Jay Sole

Analyst

jay.sole@ubs.com

We believe Softline companies are managing inventory well: +1-212-713 3559

The market continues to focus on how marketplace inventory levels will impact Softlines Mauricio Serna, CFA

stocks. To address this question, we analyzed industry inventory levels following the Analyst

completion of 1Q26 earnings season. We draw two conclusions: 1) Softlines industry mauricio.serna@ubs.com

inventory growth is now roughly in line with sales growth and we therefore see limited +1-212-713 9028

risk of incremental markdown activity; and 2) the Street’s 2Q gross margin estimates Srikar Vinjamuri

largely reflect this dynamic. As a result, we believe Softlines companies are navigating Associate Analyst

the uncertain consumer spending environment as well as tariffs effectively. srikar.vinjamuri@ubs.com

+1-212-713 3448

Industry inventory levels suggest supply is in-line with demand: Natalie Koltermann

The Softlines industry’s inventory level on a y/y basis rose 5.0% in 1Q26, while 2Q26 Associate Analyst

sales are expected to grow 4.9%. This implies a ~-10 bps spread between “next quarter natalie.koltermann@ubs.com

sales growth” and “ending quarter inventory growth.” We view this spread as +1-212-713 4229

indicating supply is essentially in-line with demand. Plus, the q/q trend is stable and has Aditya Kulkarni

been for the last few quarters (Fig. 1). Associate Analyst

aditya.kulkarni@ubs.com

We think this dynamic is reflected in Street’s 2Q GM% forecasts: +1-212-713 1098