Dive Brief:
- Bath & Body Works will begin adjusting its inventory assortment and exit select product categories starting in Q1 2026, according to a Nov. 20 earnings call.
- The personal care and home fragrance company will pursue SKU rationalization efforts because customers say the store is “too overwhelming and confusing,” CEO and Director Daniel Heaf told analysts.
- “We're making choices to exit categories that haven't been successful for us that increase complexity such as men's grooming and hair, and we'll continue to work to optimize our portfolio as well,” CFO Eva Boratto said.
Dive Insight:
Bath & Body Works is focusing on improving inventory management as the company pursues a turnaround amid a sales slump.
Heaf said that Bath & Body Works is taking out categories that “haven’t grown in the way that we had expected.” In turn, the retailer is evaluating its merchants to identify those contributing unproductive SKUs.
“Daniel spoke about SKU simplification,” Boratto said. “That simplification will bring cost reductions over time, and we'll continue to optimize our overall operations to drive cost savings as we prioritize focusing on high-value consumer-focused areas.”
Bath & Body Works has also been working to clear out seasonal products, Boratto told analysts. By increasing promotional activity and hosting its two semi-annual sale periods, the retailer was able to end the quarter with clean inventory.
“So, we'll be really thoughtful on our inventory management and our decisions around timing and when to exit,” Boratto said.
Bath & Body Works ended Q3 with about $1.3 billion in inventory, up from roughly $1.2 billion the previous year, according to an earnings report.
Several retailers have been pursuing leaner inventory mixes. Lowe’s, for instance, is looking to slash 15% of SKUs by the end of the year to drive inventory productivity. Advance Auto Parts is leaning on a similar strategy, targeting unproductive SKUs as the retailer overhauls its inventory operations.
