The EU’s move to ban the destruction of unsold clothes and footwear is forcing fashion groups to rethink how they plan, move, and clear inventory. Instead of quietly scrapping excess stock, brands may need better tools for forecasting demand, managing returns, and finding new resale or outlet channels. That shift puts the spotlight on supply chain and inventory technology providers that help retailers keep stock levels under tighter control. This article looks at 3 stocks that are directly exposed to this news event and how their businesses could be positioned as retailers overhaul their logistics and planning systems.

Softcat (LSE:SCT)

Overview: Softcat is a UK based IT reseller and infrastructure solutions provider that helps businesses and public sector organisations design, buy and run technology across cloud, cybersecurity, networking, data, automation and AI.

Operations: Softcat generates all of its revenue, around £1.8b, from value added IT resale and infrastructure solutions in the United Kingdom.

Market Cap: £3.6b

Investors watching how retailers respond to the EU’s crackdown on waste may find Softcat interesting because it sits at the heart of the IT decisions those companies now need to make, from cloud and data tools for inventory forecasting to security and networking across supply chains. The company has grown earnings faster than the UK IT sector recently, carries a very high ROE of 49.3% and trades on a P/E below many peers, yet faces pressure from lower software margins and rising operating costs. With the recent acquisition of CRN’s training and services business adding more managed services firepower, the key consideration is how all of this affects Softcat’s long term profitability and resilience as retailers increase digital spending.

Softcat’s high 49.3% ROE and P/E below many peers hint that the market may not be fully pricing its retail IT role as EU rules reshape inventory decisions, but the real twist sits in the 3 key rewards and 2 important warning signs

Grid Dynamics Holdings (GDYN)

Overview: Grid Dynamics Holdings is a US based provider of enterprise AI and digital transformation services, helping retailers and other large companies use data, cloud and software engineering to improve customer experiences, supply chains and core operations.

Operations: Grid Dynamics generates about US$415.5m from computer services, with most revenue in the United States and additional contributions from the United Kingdom, Poland and other markets.

Market Cap: US$484.2m

Grid Dynamics Holdings is closely tied to the EU’s crackdown on waste because many of its retail clients already rely on it for pricing, logistics and supply chain analytics, including a large European footwear company that could be directly affected by the new rules. The stock sits at an interesting crossroads, with AI projects now a larger share of revenue, a history of rapid earnings growth and a business that benefits when retailers invest in demand forecasting and outlet or resale strategies. It also faces risks from a rich valuation, recent losses, client concentration and geopolitical exposure in its delivery footprint. For investors who think the market reaction and index removals have gone too far, the bigger question is how this AI and supply chain story plays out from here.

Grid Dynamics Holdings already sits in the middle of retailers’ AI build out, yet the market reaction and recent losses may be masking key strengths and pressure points that only show up in the 2 key rewards and 2 important warning signs

Technology One (ASX:TNE)

Overview: Technology One is an Australian enterprise software company that provides cloud based business systems such as finance, HR, asset management, student management and supply chain tools to government, education, health and corporate customers in Australia and overseas.

Operations: Technology One generates most of its revenue from Software at about A$435.5m, with smaller contributions from Corporate services at about A$97.8m and Consulting at about A$98.0m.

Market Cap: A$9.7b

Technology One is positioned within this EU supply chain reset, with its integrated supply chain and inventory software helping retailers use predictive analytics and automation to comply with tougher rules while aiming to protect margins. Recurring SaaS revenue, high ROE and consistent earnings growth indicate a quality core, while recent half year numbers show revenue and EPS moving in the same direction and a dividend on top. The risks include a rich valuation and rising competition from global and AI centric rivals, so expectations leave less room for disappointment. For investors watching fashion groups increase digital spending on compliance ready systems, an important consideration is how much of that potential is already reflected in Technology One’s stock price.

Technology One’s recurring SaaS engine and high ROE have investors focused on the upside, but the real story sits in how those expectations line up with the analyst forecasts for Technology One and what might be quietly shifting underneath.

The three stocks in this article are just a starting point. The full Supply Chain Technology Providers screener surfaces 34 more companies whose supply chain and inventory stories could be just as compelling. Use Simply Wall St to identify, analyze and filter for the specific catalysts, financial health and business narratives that matter most so you can focus on the highest conviction ideas in this theme.

Take Control of Your Investment Journey

If Softcat or any of these companies sound like a great opportunity, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value the ideal entry point. Once you've made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates. Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives. By uncovering hidden catalysts and risks early, you'll accelerate your decision-making and stay one step ahead of the market.

Seeking Fresh Alternatives Before They Fly

New themes can hit breakout momentum fast, and once the crowd catches on the best entry points are gone. Scan these fresh stock clusters while it matters and consider your options promptly.

• Spot small companies where strong balance sheets back the story by reviewing the curated list of solid balance sheet and fundamentals (20 results) before those fundamentals are fully reflected in prices.
• Target income ideas built around sizeable payouts by scanning the hand picked 4 dividend fortresses while yields and coverage data are still flying under the radar for now.
• Follow the money flowing into AI infrastructure by checking the focused 54 AI infrastructure stocks and see which enablers of the trend might be catching momentum early.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.