Dive Brief:
- Duluth Trading Co. expects a year-over-year double-digit decrease in inventory levels by the end of the fiscal year due to SKU reductions and rightsizing receipts, according to a Dec. 16 earnings call.
- The workwear retailer reported a 17% YoY reduction in its Q3 ending inventory as a result of the effort to balance receipts, President and CEO Stephanie Pugliese told analysts.
- “We expect these continued efforts combined with planned reductions in SKU and style counts for upcoming seasons to drive more clarity in the assortment, more efficient cash utilization, stronger inventory turns and improved margins,” Pugliese said.
Dive Insight:
Duluth Trading has been steadfast in its focus on inventory management and enterprise planning, which has driven more streamlined operations, Pugliese said.
The retailer aims to have its inventory assortment reflect more of its core products, and is on track to cut SKUs by more than 20% in spring and summer of 2026, Heena Agrawal, SVP and CFO, said. Looking ahead, Duluth Trading is targeting another double-digit SKU reduction in fall and winter 2026.
Pugliese noted that the retailer "implemented enhanced operational protocols and planning processes to optimize unit inventory distribution and depth across our fulfillment center network." In turn, Duluth Trading could meet customer demand and tap into efficiencies by maximizing the output of its automated facility in about a day.
Duluth Trading’s inventory strategy drove a 300 basis point improvement in store in-stock levels and maximized inventory in the retailer’s fully automated fulfillment center in Adairsville, Georgia, per Agrawal.
“Key actions included raising minimum presentation levels in stores and responding with additional replenishment to backfill high-velocity SKUs,” Agrawal said. “Enhanced processes like enterprise planning have instituted greater discipline in optimizing inventory receipts to manage cash and inventory positioning to drive greater availability.”
Pugliese noted that the retailer’s Adairsville facility has shipped more than 60% of its units to customers so far this quarter, up 20 percentage points YoY.
Inventory for the third quarter ending Nov. 2 stood at about $192 million YoY, down roughly $39 million, Agrawal reported. The 17% YoY decrease follows a 12% YoY reduction in Q2.
“Our commitment to inventory discipline will continue into next year with an enhanced focus on product that is core to Duluth,” Pugliese said.
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