Dive Brief:
- Bath & Body Works had lower levels of clearance inventory heading into its June semiannual sale period this year as it rethinks its approach to promotions, according to its Q2 earnings call last week.
- The personal care retailer managed to reduce distressed inventory levels by “buying our seasonal business correctly,” CEO Daniel Heaf said while noting overall inventory was down 10% year over year at the end of the quarter.
- “We aren't looking to buy large amounts of inventory that we can flush through in semiannual sales,” Heaf said, noting that the company is making promotional activity less of a priority in the second half of the year.
Dive Insight:
A new approach to promotional selling events is pushing Bath & Body Works to rethink its supply planning and purchasing decisions.
Heaf emphasized that promotions and markdowns will continue to be important drivers for the business, but the retailer is focusing on such initiatives more in the first six months of the year.
“My macro is you can't promote a business back to health,” Heaf said. “So, we're using that lever less, and we're using brand marketing and product as the things that we are leaning on to drive growth in the back half.”
Although Bath & Body Works’ inventory levels were up overall at the end of June, Heaf said forward inventory was clean and that the company was “well positioned to deliver in the back half.” He also noted that the company was hard at work replenishing inventory for popular product launches, such as its Fruit Fusion line for which pop star and actress Hilary Duff serves as brand ambassador and creative partner.
Bath & Body Works’ work rightsizing its product mix is a key lever of its turnaround efforts following sluggish sales in 2025. The company said at the time it would begin exiting select product categories in Q1 of this year as it launched a “Consumer First Formula” growth strategy. Heaf said last week the company was broadly where it expected to be with its SKU simplification program at the end of Q2.
The retailer’s decision to trim SKU counts resulted from customer feedback that stores were “too overwhelming and confusing,” according to a November earnings call, mirroring the rationale behind assortment trimming at some other retailers. For example, BJ’s Wholesale Club recently plans to cut its product count by 20% over the next couple years after finding itself “over SKUed,” according to President and CEO Bob Eddy.
