Under Armour Hits SKU Reduction Target, Retail Peers Follow

Under Armour reached its goal to eliminate 25% of its product assortment in fiscal Q4, ending the year with $915 million in inventory – down 3% year over year. The achievement caps a two-year push to simplify the supply chain and focus inventory on higher-turnover items.

Under Armour’s Inventory Trim

The retailer initially set the 25% SKU reduction target in 2024. Tailored cuts in the fourth quarter brought inventory to that level, according to CFO David Taleghani. Lower inventory levels reduce carrying costs and clearance risk, two drags that have weighed on athletic apparel margins across the sector.

Under Armour joins a growing list of retailers treating SKU rationalization as a margin lever. The company now needs to demonstrate that the leaner mix can sustain revenue growth without sacrificing shelf presence. Next quarter’s inventory turnover and gross margin data will be the first test.

Retailers Extend the Strategy

Dollar General has cut more than 1,500 SKUs over the past several years. CEO Todd Vasos called SKU reduction a “big win” as the chain prioritizes faster-turning goods. Fewer stock-keeping units mean less working capital tied up on shelves and fewer markdowns on stale items. Dollar General holds an Alpha Score of 40 out of 100, labeled Mixed, in the Consumer Defensive sector. Traders tracking the discount retailer can check the DG stock page for updated metrics.

Bath & Body Works is exiting whole categories this year after customers described the store as “too overwhelming and confusing,” per CEO Daniel Heaf. The personal care and home fragrance brand is dropping unprofitable or low-margin lines to reduce costs and simplify the shopping experience.

Lowe’s is on pace to trim 15% of its SKUs by the end of 2025. The home improvement chain expects fewer product variants to streamline logistics and improve in-stock rates on top-selling items.

Market Context and the Next Checkpoint

SKU rationalization typically improves inventory turnover and reduces carrying costs, a mechanism that can expand gross margins over time. For investors screening the retail space, the trend reinforces a shift away from top-line growth at all costs toward capital efficiency.

Execution risk remains. Cutting too many SKUs can cede shelf space to competitors or disappoint customers who want variety. The real test will come in comparable-store sales and gross margin trends over the next two quarters. If these retailers can hold or improve both metrics, the inventory discipline will translate into higher returns on invested capital.

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