Lowe’s advances inventory optimization efforts

Listen to the article
2 minutes

This sound is generated automatically. Please let us know if you have any feedback.

Summary of diving:

• Lowe’s has thrived SKU Rationalization efforts to increase inventory productivity led to a 50 basis point increase in third-quarter gross margin, according to the Nov. 19 earnings call.
• The retailer is on track to achieve its goal of reducing SKUs by 15 percent by the end of 2025, EVP of merchandising William Boltz told analysts.
• “We’ve seen very good sales results so far in the inventory we’re exiting. That was really the core of the 50 basis point mix we saw in the third quarter,” said Brandon Sink, EVP and CFO.

Diving Insights:

Lowe’s ended the third quarter with $17.2 billion in inventory, down nearly $400 million from a year earlier, Cinque told analysts.

“This net decrease also reflects the inclusion of inventory from recent purchases of approximately $600 million and higher tariffs,” he said.

Lowe’s attributed the gains from lower inventory to several productivity initiatives. Sink said the retailer used AI inventory solutions to optimize demand planning, allocation and fulfillment while also strengthening its SKU rationalization efforts.

Lowe’s efforts to optimize its inventory mix are part of its supplier diversification strategy. In May, executives said the company was taking a systematic approach to reviewing its inventory, including Freddie SKUsproduct classification, line and collection structure.

SKU management is a vital tool for retailers and many have relied on it in recent years. For example, SKU The cuts were a “huge win” for discount retailer Dollar General, CEO and CEO Todd Vasos told analysts in June. At the time, Vasus said Dollar General dropped 1,000 SKUs last year and it was expected to decrease further this year.

Advance Auto Parts also targets non-productive SKUs as part of a larger inventory overhaul. Last year, the auto parts retailer expected to handle 250 line reviews.