$TGT $WMT Inventory Glut Good for $LQDT

Named in this article is $LQDT Liquidity Services Inc. I’ll have to chart them up and place the links at the end of this post. Some of the other players I’ve never heard of, very small exposure, but the deals on “stuff” ranges from women’s $100 coats (now $2.75 new) to TVs, kids toys, lawn furniture, you name it:

WSJ headline: Glut of Goods at Target, Walmart Is a Boon for Liquidators

Off-price chains are awash in appliances, apparel and outdoor furniture that never made it to stores
By Suzanne Kapner | Photographs by Cooper Neill for The Wall Street Journal
July 4, 2022 5:33 am ET


The excess inventory piling up at large retailers such as Target Corp. and Walmart Inc. is proving a boon for liquidators and other companies that help dispose of the oversupply.

Liquidity Services Inc., Xcess Limited, B-Stock LLC and other companies said they are seeing a glut of kitchen appliances, televisions, outdoor furniture and apparel that major chains are trying to clear out. In many cases, the liquidators are picking up pallets at the ports or from a warehouse without the goods ever hitting store shelves and are selling the items to smaller retailers and individuals who resell them online.

“What’s unusual is the large retailers may not ever touch the products,” said JD Daunt, chief commercial officer of Liquidity Services, which operates online marketplaces. “They are asking us to get in front of this earlier than in the past. There is an unusual amount of excess inventory, and it’s affecting so many retailers at the same time.”

More about $LQDT:


Last earnings for $LQDT was 5 MAY 22 bmo and it was a small beat: +.17 CENTS per share vs. expectations of .16 CENTS. Rev growth of +10.50%

BETHESDA, Md., May 05, 2022 (GLOBE NEWSWIRE) – Liquidity Services (NASDAQ:LQDT; www.liquidityservices.com), a leading global commerce company providing trusted marketplace platforms that power the circular economy, today announced the following financial results as of the second fiscal quarter ended March 31, 2022 as compared to the applicable prior year periods:
Gross Merchandise Volume (GMV) of $276.9 million, up 34%, setting a new record, and Revenue of $68.3 million, up 11%

GAAP Net Income of $12.0 million1, up $6.7 million, and GAAP Diluted EPS of $0.351, up $0.20
Non-GAAP Adjusted EBITDA of $9.2 million, down $0.2 million, and Non-GAAP Adjusted Diluted EPS of $0.17, down $0.03

Cash of $84.3 million, $17.0 million of shares repurchased in the quarter, $48.7 million trailing 12-month operating cash flow, and zero financial debt
Trailing 12-month GMV over $1.0 billion, up 42%, Net Income of $56.7 million1,2, Non-GAAP Adjusted EBITDA of $43.3 million

Also, farmboy take note:

Liquidity Services issued its 2022 ESG Report, detailing its important role in powering the circular economy via its e-commerce platforms to redeploy valuable surplus assets and divert millions of tons of returned goods away from landfills.

Liquidity Services received the 2021 Value in Excellence Award from $ADM (NYSE:ADM). The award program honors company suppliers that deliver superior performance and exceptional value to ADM and its customers.

Liquidity Services’ leadership role in the circular economy was profiled in a feature broadcast by CNBC entitled: “Inside the Company at the Center of the $644 Billion Liquidation Industry.”


Liquidity Services entered into a new credit facility with Wells Fargo Bank that provides revolving loans up to a maximum aggregate principal amount of $25 million with a $10 million sublimit for standby letters of credit.

Charts for $LQDT

:pushpin: Daily chart trading inside a sym triangle which closed above the 20 EMA just last Friday:


:pushpin: Weekly chart tested a horizontal support 8 weeks ago and it held. Grinding upward slowly since then. Just broke out from a down trendline last week, faded on that breakout, but still outside that trendline meaning the breakout is still good

Any bullish move this week might close this baby above the 17 EMA on this weekly chart for a decent 1/3 nibble:


:pushpin: Monthly chart shows promise with the breakout from a down trendline which began last December and had three other monthly confirmation lower lows to form the trendline down. This breakout also shows that the RSI 5 (relative strength index) closed just above the 30% line and that’s another bullish indicator:


Lastly, here’s the bio & website for this company:

Liquidity Services Inc.
6931 Arlington Road, Suite 200
Bethesda, Maryland


Sector: Discretionary
Industry: Broadline Retailers
Employees: 614



Liquidity Services, Inc. engages in the provision of e-commerce solutions to manage, value, and sell inventory and equipment for business and government clients. It operates through the following business segments: GovDeals, Capital Assets Group (CAG), Retail Supply Chain Group (RSCG), and Machinio.

The GovDeals segment provides self-directed service solutions that enable local and state government entities including city, county, and state agencies to sell surplus and salvage assets through the firm’s GovDeals marketplace.

The CAG segment offers managed and self-directed service solutions to sellers and consists of marketplaces that enable commercial businesses to sell surplus and idle assets. CAG also offers a suite of services that includes surplus management, asset valuation, asset sales, and marketing.

The RSCG segment consists of marketplaces that enable corporations located in the U.S. and Canada to sell surplus and salvage consumer goods and retail capital assets. Its services also include returns management, asset recovery, and e-commerce services.

The Machinio segment operates a global search engine platform for listing used equipment for sale in the construction, machine tool, transportation, printing, and agriculture sectors.

The company was founded by William P. Angrick III, Jaime Mateus-Tique and Benjamin Ronald Brown in November 1999 and is headquartered in Bethesda, MD.

According to that CNBC video I posted a link to, this is the only company in America which is listed and providing the services they offer. This is a very informative piece on what the liquidation biz used to be like and what is like now with $LQDT selling to re-sellers - after $LQDT has frontrun the goods to palletize them -or sell them separately on their websites - and make notes on what is broke, missing something, refurbished, reboxed, etc, being sold to a re-seller.


They liquidate construction equipment, delivery trucks, postal trucks, gym floors, scoreboards, you name it.

They handle returns for Amazon and Walmart, and with online returns running 3x more than brick and mortar stores, their revenues continue to grow. In the old days, returns were incinerated, destroyed or sent to landfills. Now the companies involved send “returns” to $LQDT.

The 130,000 sq. ft. warehouse in Texas and they process between 15 and 20 truckloads of “product” per day. I grabbed the following factoids from this video:

:pushpin: In 2021, 16.6% of all sold goods were “returned” either to online or brick-n-mortar stores.

:pushpin: 20.8% of all 2021 holiday purchases online were returned.

:pushpin: Processing a return can cost a retailer 66% of the item’s original price.

:pushpin: Tony Sciarotta, Executive Director of Reverse Logistics, suggests inflation in prices at stores results from this exponential rise in “returns” of unwanted products, because returns are really hurting profits. Returns are being sold at a loss to $LQDT.

:pushpin: $AMZN used to brag it doesn’t send returns to landfills, yet, they were incinerating items. A factoid thrown out in this video is that “the environment” is Generation Z’s no. 1 worry. Young people pushed $AMZN to now “liquidate” these items instead of incinerating them. Another factoid: supposedly, buying a “returned/used” item saves 82% of its carbon footprint.

:pushpin: $LQDT turned profitable in its first two years of business. Founded in 1999, it had its first big sale of a $200,000 submarine they bought from the State of Georgia. Buy year 2002, they were a profitable company. In 2006 it IPOed on the NYSE. And the company stock began attracting attention during the pandemic.

:pushpin: $LQDT not only handles $AMZN returns, but unclaimed US Postal Service items, TSA checkpoint items travelers had to leave behind, out of service military gear and vehicles.

:pushpin: $LQDT pushing 5 million users on their platforms.

:pushpin: $LQDT has special machinery which chews up and melts down styrofoam into 20 pound blocks which go out to packers who can blow the blocks up for repacking new goods. $LQDT recycles 20 tons of styrofam in a year. $LQDT recycles 200 tons of carboard in a year. $LQDT also recycles 20 tons of electronics per year.

:pushpin: In this video you’ll see disparate items - which have passed the checkers at $LQDT warehouse - be assembled on one pallet and wrapped with plastic film. That pallet is then put up for auction at www.liquidation.com.

:pushpin: Then for direct sales of one off items, $LQDT has the website www.secondipity.com and had I known about this website earlier this Summer, I would have bought an electric mower here. (Free shipping and returns in the continental USA. This is not a misprint.) Check out these cordless power tools from brands such as Ryobi, Milwaukee, Rigid, DeWalt, etc. Look at these prices. I have bought “re-conditioned” tools from Amazon before with no problem, but these prices at secondipity.com beat the Amazon prices. (And also note that certain prices here are beat on Amazon, so, compare before you buy.) $LQDT also sells one and two year warranties for these products.

For instance, this website has a RYOBI 18-Volt ONE+ Cordless Reciprocating Saw (No Retail Packaging/Bulk Packaging) (Bare Tool, P519) going for $69.00 and I recently bought one from Amazon (a reconditioned model under warranty) for only $47.00.

But on the other hand, you can pay $119.00 patio sweeper which I saw “on sale” at a Home Depot a few days ago for $159.00 and which normally retails for $199.00 (I believe this item is being discontinued and making way for a newer designed sweeper.)


:pushpin: $LQDT inspects all electronics. If, say a TV has a damaged screen from shipping, that screen will be replaced at their warehouse from a TV which cannot be repaired. A spokesman in this video said $LQDT “refurbishes” about 100 TVs daily which sell for 60-70% of an online/brick and mortar price. (This makes me wonder what $LQDT pays for a whole truckload of returned TVs as they have labor costs to include in their refurbished prices.)

:pushpin: Factoid: 81% of Boomers participated in resale items in 2021. That figure was just 39% in 2019.

:pushpin: Refurbished electronics are very popular due to the shortage of new goods (due to chip shortages.) You want a good as new laptop or noise cancelling headphones? This is the place. A spokeswoman for Hewlett Packard mentions her company gets “good returns” on selling their “returned” computers en masse to $LQDT. But later in this video, we learn too that $HPC has jumped into selling their own “returned computers” on their website. https://www.hp.com/us-en/shop/slp/july-4-sale/desktops?jumpi…

:pushpin: Speaking of microchips, this video shows giant refurbished microchip machines for sale. The CEO of $LQDT says Fortune 500 companies are buying these machines from $LQDT.

:pushpin: The Secondary Market is so huge now that Amazon is now setting up webpages for refurbished, renewed, returned items which all come with the usual warranties. Amazon will now sell you a $10 “bag of crap” which you have no idea as to what is contained on www.WOOT.com, which is their new standalone website for “deals” on products which are overstocked.

:pushpin: Best Buy $BBY has jumped into selling open box electronics, stuff which was returned, and I never knew about this either: https://www.bestbuy.com/site/searchpage.jsp?_dyncharset=UTF-…


Right there on that Best Buy opening page is an Apple 5 watch selling for $299 which was $749.00 originally. This will probably be gone before you see it, but, let’s see if you open that link I just posted before this paragraph.

:pushpin: $LQDT has www.govdeals.com for outdated military and social services equipment, unopened unclaimed mail, etc. The opening page to this website boggles the mind with listings.

Here are just the listings for “A”

Agriculture Equip/Commodities 67
Aircraft 4
Aircraft Parts and Components 1
Alarm and Fire Protection Systems 1
All Terrain Vehicles 41
All Vehicles (Restricted Vehicles) 4
Ambulance/Rescue 23
Animal Equipment, Cages and Feed 9
Arts and Crafts 23
Arts, Crafts, and Collectibles 61
Asphalt Equipment 18
Audio/Visual Equipment 265
Automobiles 410
Automobiles (Classic/Custom) 13
Aviation Ground Support Equipment

:pushpin: $LQDT has a new “bid online” pickup at one of our warehouses. Meaning, they save on shipping, or I guess I should say “re-shipping” as a second sale on one item.

:pushpin: Lastly, Another liquidator in this space is B-Stock which runs giant liquidation services for $AMZN, $WMT, $COST, and $HD. B-Stock sold over 150,000,000 individual items last year. (Until this video, I had never heard of this company either.) The CEO of B-Stock, Howard Rosen, worked six years at eBAY where he noticed liquidation was an untapped goldmine if you bought “at scale” from big companies which don’t want to spend a whole bunch of time and effort sorting through returns.


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I nibbled on $LQDT shares at $14.80 in yesterday’s after-market. I added more today and now have a 1/3rd position.

The 20 and 50 EMAs are turning noticeably upward is another positive sign. We would like to see a bullish crossover of those EMAs

But it is the breakout from yesterday, with follow through today, and volume today higher than yesterday which is even more positive.


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Bought another load today on the bullish 20 x 50 EMAs which triggered a bit ago.

New averaged up price is $15.65 per share.

Last sale was $16.38.