Retailers Cut Product Lines to Improve Profits and Inventory

Major US retailers are reducing the number of products they sell to control inventory, limit excessive discounting and improve profitability as consumers pull back on spending amid high food and gasoline prices. Dollar General, BJ's Wholesale Club, Lululemon and Under Armour have announced assortment reductions in 2026, aiming to strengthen operations while accepting the risk of offering shoppers fewer choices.

According to company earnings calls, Dollar General eliminated 1,500 stock-keeping units (SKUs) by March 2026. Under Armour said in August that it had reduced its SKUs by 25% over the preceding years and planned another 25% cut. BJ's Wholesale Club targeted a reduction of approximately 20%, while Lululemon reported a 15% decrease in its North American assortment in September.

The strategy reflects a broader effort to prevent unsold merchandise from accumulating and forcing retailers into heavy markdowns. However, reducing product ranges can shrink revenue in the short term, potentially disappoint customers and raise questions among investors about future growth.

Guggenheim Securities senior retail analyst Simeon Siegel said discounting remains necessary when products fail to sell, but retailers need to address mistakes quickly rather than rely on repeated promotions.

"If you have zero discounting, you're not taking enough fashion risk," Siegel said. "But discounting needs to be fixing mistakes. It needs to be done quickly."

Under Armour and Lululemon have faced investor concerns about excessive markdowns. Under Armour's operating income turned negative in fiscal 2025 and fiscal 2026, according to the company, highlighting the profitability challenges behind its product reduction strategy.

Under Armour CEO Kevin Plank described the company's revised priorities during its fiscal first-quarter earnings call in August, emphasizing product quality and more disciplined execution.

"Today, we're managing for quality. Fewer products with greater purpose, tighter execution and a clear reason to buy," Plank said.

The company is also seeking to sell more merchandise at regular prices rather than pursue sales volume that undermines profitability.

"We will sell so much more of so many less products at a much higher full retail price," Plank said.

Siegel said assortment reductions can help brands regain pricing power, but simply removing products does not guarantee stronger sales. Lululemon increased sales by more than $500 million between fiscal 2024 and fiscal 2025, while operating profit declined by approximately $300 million over the same period. Its shares fell around 65% over the preceding two years, according to the source report.

"Selling fewer options is not the same as selling fewer things," Siegel said.

Lululemon reported $6.3 billion in US sales in fiscal 2025. Siegel said domestic revenue of $3 billion to $4 billion typically represents a healthy saturation level for companies seeking to maintain scale without weakening their brand perception.

"It's a level where they can be large and still cool. Above that, they start cheapening what they stand for, literally cheapening the product, but also cheapening the perception," Siegel said.

Nike represents an exception to that general assessment, having generated $20 billion in North American sales in fiscal 2026. However, the company said during its fourth-quarter earnings call in June that it was rebalancing its product portfolio after reducing revenue from classic footwear franchises by more than $2 billion in fiscal 2026. Its shares had declined around 45% during 2026, according to the source report.

For discount retailers and warehouse clubs, assortment reductions primarily support inventory efficiency rather than higher prices. Businesses that carry thousands of brands can redirect shelf space toward popular products, improve supply-chain operations and introduce categories that were previously unavailable.

"When you shrink a box ... and say, I'm going to focus more on curation, you're getting smaller, but you're trying to reestablish why someone's walking into your box in the first place. And so it does get better, but it doesn't necessarily help your bottom line as much," Siegel said.

BJ's Wholesale Club CEO Robert Eddy said reducing redundant options, such as the number of body-wash fragrances, can concentrate demand on remaining products while creating space for additional categories.

"That is sourcing sales growth as well and sort of giving us the formula where we can cut SKUs, and see sales go up, and see margin dollars go up," Eddy said during the company's fiscal 2026 second-quarter earnings call in August.

Dollar General previously reported in June 2025 that eliminating 1,000 SKUs compared with the previous year had freed shelf space for best-selling merchandise and contributed to sales growth. By March 2026, the retailer said its reductions had reached as many as 1,500 SKUs, delivering benefits across its supply chain.