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Summary of diving:
- Bath & Body Works will begin to adjust its inventory and exit select product categories beginning in the first quarter of 2026. According to the Nov. 20 earnings call.
- The personal care and home fragrance company will follow up CEO and COO Daniel Heaf told analysts that SKU rationalization efforts are underway because customers say the store is “too overwhelming and confusing.”
- “We’re choosing to exit categories that haven’t been successful for us and add complexity like men’s hair and makeup, and we’re also continuing to work to optimize our portfolio,” said CFO Eva Burato.
Diving Insights:
Bath & Body Works is focusing on improving inventory management as it looks to turn around amid sluggish sales.
Bath & Body Works is eliminating categories that “didn’t grow as well as we expected,” Heaf said. In turn, the retailer is evaluating its merchants to identify those involved in unproductive SKUs.
“Daniel talked about simplifying SKUs,” Burato said. “This streamlining will reduce costs over time, and we will continue to optimize our overall operations for cost savings as we prioritize focus on high-value consumer-focused areas.”
Bath & Body Works has also been working to purge seasonal products, Burato told analysts. By ramping up promotional activities and hosting two of its semi-annual sales, the retailer was able to end the quarter with a clean slate.
“So we’re going to be really thoughtful about our inventory management and our decisions about timing and when to exit,” Burato said.
Bath & Body Works ended the third quarter with about $1.3 billion in inventory, up from $1.2 billion a year earlier. According to the income statement.
Several retailers are looking for lower inventory combinations. For example, Lowe’s is looking for this Reduce 15% of SKUs until the end of the year to increase inventory productivity. Advance Auto Parts has relied on a similar strategy. Targeting unproductive SKUs As the retailer reviews its inventory operations.
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