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Apr 26, 2024

Hallmark Cards struggles with inventory for big customer: Walmart

Kansas City-based Hallmark Cards Inc. is struggling to keep pace with the inventory needs of one of its biggest clients: Walmart. As a result, Walmart asked Hallmark to temporarily halt shipments and

Kansas City-based Hallmark Cards Inc. is struggling to keep pace with the inventory needs of one of its biggest clients: Walmart.

As a result, Walmart asked Hallmark to temporarily halt shipments and service for certain products, such as “everyday” greeting cards and stationary, according to an internal Hallmark document. Walmart plans to supplement Hallmark products with ones from American Greetings — one of Hallmark’s main competitors. The decision will affect 1,050 Walmart stores.

“Walmart felt this was a necessary step so that customers have a sufficient amount of products on display in the card department,” the document said. “Once Hallmark’s inventory returns to sufficient levels, Walmart will work to hand the ED categories back over to Hallmark in those accounts.”

Hallmark will continue supplying other items, such as seasonal products, gifts and ornaments to Walmart stores.

In the document, Hallmark made it clear that Walmart won’t be removing Hallmark’s current inventory, fixtures or signage.

Hallmark provided a comment via email:

"Hallmark does not comment on specific questions related to our customers. In late June, a new modernized system infrastructure was implemented across our Hallmark Global business. As a result, shipments to our retailers in July were slower than usual. Significant progress has since been made to optimize the flow of retailer shipments, and inventory levels should begin to stabilize this month."

American Greetings and Walmart could not be reached for comment in time for publication.

Retailers continue to face supply chain challenges, according to a CNBC survey of 341 logistics managers in December. Sixty-one percent of respondents said the supply chain isn’t functioning normally, and 30% said they didn’t expect things to return to normal until 2024. Nearly 30% of respondents said operations won’t return to normal until 2025 or later, possibly never. Some of the challenges cited included skilled labor shortages, raw material shortages and tight warehouse space due to “soaring inventories.” Logistics managers also told CNBC that they’re continuing to order products six months in advance.

Most of Hallmark’s greeting cards sold in the U.S. are produced by Hallmark employees at the company’s card production center in Lawrence, according to Hallmark’s website. Most of Hallmark’s wrapping paper, ribbons and bows also are produced in Kansas at Hallmark’s Leavenworth facility. Greeting cards requiring handwork, such as beads or tassels, are made abroad.

In mid-2020, Hallmark provided a more detailed breakdown to Reuters, saying that 70% of its cards are made in Lawrence and that the remaining 30% are produced via suppliers in China, Vietnam and Sri Lanka. American Greetings told Reuters that most of its greeting cards and gift wrap are made in the U.S. and that some products are made in China and other Southeast Asian countries.

Revenue, 2022