From BJ’s to Lululemon, retailers are trimming assortments
Retailers are trimming assortments in an effort to clean up their balance sheets.
As shoppers cut spending in the face of high gas and food prices, businesses have pulled more levers to boost profitability and appease investors. During earnings calls this year, a range of retailers have highlighted efforts to reduce the number of items they sell, commonly tracked as stock keeping units, or SKUs.
In March, Dollar General said it trimmed 1,500 SKUs. In August, Under Armour said it shrunk SKUs by 25% over the past few years and plans to cut another 25%, while BJ’s Wholesale Club said it plans to reduce roughly 20% of SKUs. In September, Lululemon said it cut North America SKUs by 15%.
Trimming inventory can help a business stabilize its sales or even get back to growth, and can reduce the chances a company gets stuck with unwanted inventory. But the move can also leave consumers with less choice — a trade-off many retailers have been willing to make.
Shrink to grow
A person shops at Macy’s in Herald Square, in New York, June 3, 2026.
Michael M. Santiago | Getty Images
When a brand struggles to sell certain products, it can lead to discounting, which hurts profitability. Some markdowns are expected when businesses roll the dice on new products that don’t end up selling well, but too many promotions can cause problems.
“If you have zero discounting, you’re not taking enough fashion risk,” said Guggenheim Securities senior retail analyst Simeon Siegel. “But discounting needs to be fixing mistakes. It needs to be done quickly.”
Under Armour and Lululemon are both facing repercussions from what investors see as too many markdowns.
Under Armour’s operating income, which illustrates its underlying profitability, turned negative in fiscal 2025 and 2026. The company said its problems would not be solved by chasing unhealthy sales volume or short-term revenue.
“Today, we’re managing for quality. Fewer products with greater purpose, tighter execution and a clear reason to buy,” said Under Armour CEO Kevin Plank on the company’s fiscal first-quarter earnings call in August. “We will sell so much more of so many less products at a much higher full retail price.”
Siegel said that when a retailer acknowledges it wants to shrink revenue, the goal is to regain pricing power.
A clearance rack in a Lululemon store in New York, Oct. 7, 2026.
Ryan Baker | CNBC
Lululemon grew its sales by more than $500 million from fiscal 2024 to 2025. Yet its operating profit fell by about $300 million in the same time span. Shares are down around 65% over the past two years.
“Selling fewer options is not the same as selling fewer things,” said Siegel. “Lulu has a long way to go, and simply cutting SKUs, simply saying we need to have better product is not the answer.”
Siegel said too much of even the best product can dilute the value of a brand.
Lululemon reported $6.3 billion in U.S. sales in fiscal 2025. Siegel said $3 billion to $4 billion in domestic revenue is where companies typically…
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