We Appraised over $4.0 Billion in Inventories in 2002

The Asset Appraisal business unit appraised slightly more than $4.0 billion of consumer product inventories during 2002 at manufacturing, wholesale and retail companies on behalf of lending institutions.

Let’s get down to some nitty-gritty numbers, shall we?

Here’s a breakdown for those keeping score: the retail segment accounted for 45.7% of the inventories appraised by Buxbaum during 2002, up from 44.4% in 2001; wholesale distribution represented 43.2% versus 42.2% the previous year; and the remaining 11.1% was derived from projects at a variety of combined manufacturing/wholesale distribution and/or wholesale distribution/retail operations, down from 13.4% in 2001.

We anticipate a spike in the number of inventory appraisals going into the second quarter of this year, as lenders evaluate their clients’ year-end results and the impact on the value of the inventory collateral. Concurrently, our Asset Recovery business unit, which manages liquidation sales and buys/sells closeout merchandise, is also experiencing heightened activity. But that’s another story (and one we’ll tell soon!).

This past year was a roller-coaster ride for many consumer product sectors. While at certain points there was a sense of optimism throughout the retail industry, results released to date by the publicly owned companies indicate another difficult year. Given this environment, we continue to stress to our lending clients the importance of regularly monitoring the fluctuating value of retail merchandise presented as collateral on loans.

These concerns were amplified during the fourth quarter of 2002, when retailers across the board – even the most powerful of discount and mass-merchandise stores – suffered through a dismal holiday selling season. In many instances, this resulted in a significant glut of inventory, not just at the retail level, but also at the manufacturing and wholesale levels. Thus, within a 90- to 180-day period, we’re seeing the value of certain inventories fluctuate wildly, which is all the more reason that lenders are now monitoring those values on a more frequent basis.

Of course, as retail goes, so go the manufacturing and wholesale distribution sectors, and given the amount of excess and slow-moving inventory throughout all markets, we expect our lending clients to be calling for expedient appraisals, as well as assistance in the strategic disposition of such inventories through liquidations.

Jim Siebersma heads the Inventory Appraisal business unit, and a list of the broad range of industry sectors and inventory types are to be found on our website (www.buxbaumgroup.com – click on “Asset Appraisal” and then “Inventory”). Jim can be reached at 818-878-3900 or jim@buxbaumgroup.com.