channel stuffing

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Channel Stuffing

An illegal practice in which a company willfully sells more of its product to distributors than the distributors can sell to customers. The company makes these sales on credit, which temporarily boosts its accounts receivable and by extension its current assets. This makes the company look healthier than it really is which can raise its stock price. Eventually, when the distributors are unable to sell the product they return it to the company instead of paying, which reduces the accounts receivable and brings the company's balance sheet in line with reality.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

channel stuffing

Artificially inflating current sales and earnings by shipping more goods than would normally be ordered. For example, an appliance manufacturer may inflate revenues and earnings in the current accounting period by shipping to retail stores more refrigerators, stoves, and dishwashers than the stores are likely to sell. The practice of channel stuffing borrows revenues and earnings from the future because overstocked customers will reduce orders in future periods.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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The industry's total volume was estimated to have decreased by 6 percent to 74.9 billion sticks, largely due to excise tax-driven price increases, tempered by trade loading toward the end of 2017, in anticipation of more price increases as the excise tax was further increased starting 2018.
The firm revealed in 2001 it had inflated previous results by 'trade loading', or selling large amounts of discounted stock in order to bring forward sales and thereby flatter results in the short term.
The discovery of trade loading -mostly involving LIG, the condoms and rubber gloves part of the business -triggered the exit of several senior SSL executives, including Mr Cater who stepped down in February 2001.
As we read it, we thought the writer was talking about gift-with-purchase, to wit: "This is no different from trade loading, check kiting, or for that matter shooting heroin--all addictive behavior that feels good when you start and unbearably awful when you try to stop." No point in belaboring what has been labored, almost to death.
Consider the traditional practice of quarter trade loading. To "make" a number, manufacturers will offer up incentives to distributors to buy inventory that is not needed.
When evaluating total inventories, identify the impact of end-of-period trade loading, which may be prompted by a short-term need to increase revenues but can be damaging to future sales.
Instead, it is a practice pejoratively known as trade loading or channel stuffing, in which suppliers use their name-brand clout to push overstocks off on customers.
Reynolds Tobacco Co., the second-largest tobacco supplier, eliminated its practice of "trade loading." The tactic had involved the periodic sale of large amounts of discounted cigarette inventory to wholesale suppliers; this, in turn, led to excess inventory of billions of cigarettes on retail shelves.
Cheshire-based SSL cut pounds 56 million from sales figures after eliminating the practice of trade loading, where more goods than usual had been offered to wholesale customers to boost sales before the end of financial periods.
It said yesterday the task of eliminating trade loading was now complete.
He said: 'The reality is that we are getting on top of this trade loading issue.