The opposite of channel-stuffing

Wal-Mart is making an effort to reduce inventories, and their suppliers are feeling the pain. P&G, for whom Wal-Mart is 16% of their business, has had to inform Wall Street that it may not make its numbers this quarter as a result:

On March 13, Procter & Gamble, the largest U.S. household products maker, said this quarter's "organic" sales -- which exclude the impact of acquisitions, divestitures and foreign exchange -- should rise 5 to 6 percent, after previously saying it expected growth of as much as 7 percent. The revised range stemmed in part from "recent customer inventory reductions."

Other suppliers are impacted similarly, especially those for whom Wal-Mart is an even bigger customer, e.g., Playtex (28%), or Clorox (27%).

This seems likely to have only a short-term impact since, once the inventory adjustments are made, shipments should return to normal.