Dive Brief:
- Under Armour has cut 25% of its SKUs over the last two years as the retailer targets a more disciplined inventory approach, President and CEO Kevin Plank said during a May 12 earnings call.
- The retailer expects to make further reductions, prioritizing “fewer, better products” that align with concentrated demand alongside a less complex supply chain, Plank told analysts.
- “Importantly, this is not just lower inventory, but better inventory with improved quality driven by tighter buys, a more focused assortment and stronger alignment with demand,” Reza Taleghani, EVP and CFO, told analysts.
Dive Insight:
Under Armour, like many brands, has made efforts to rethink product mixes in pursuit of a simpler supply chain and greater revenue. For some businesses, this means fewer, targeted SKUs over excessive inventory assortments.
The retailer had initially outlined its goal to eliminate 25% of its inventory mix in 2024. After purposeful efforts to trim its product assortment in Q4, the retailer ended the fiscal year with $915 million in inventory, down 3% year over year, Taleghani told analysts.
Dollar General is one of the many retailers pushing an optimized inventory mix, cutting more than 1,500 SKUs over the last few years. According to CEO Todd Vasos, SKU reduction has been a “big win” for Dollar General as it continues to prioritize goods with faster turnaround times.
Bath & Body Works has also made inventory adjustments, additionally opting to exit certain categories starting this year as customers found the store “too overwhelming and confusing,” according to CEO and Director Daniel Heaf. The personal care and home fragrance brand is specifically looking to exit categories that haven’t performed well or are unprofitable, which will eventually reduce costs.
Other retailers rationalizing SKU mixes include Lowe’s, which was on pace to reach its goal of cutting 15% of SKUs by the end of 2025.
