Dollar General Cuts 1,500 SKUs, Targeting Further Reductions to Improve In-Stocks

Dollar General cut more than 1,500 SKUs from its inventory over the last few years, COO Emily Taylor said on a March 12 earnings call. The cumulative reduction is part of what CEO Todd Vasos called a stabilization strategy, and leadership made clear it is not finished.

"It's been the cornerstone of part of our stabilization of retail," Vasos said before handing off to Taylor. "The team has done just a fabulous job over the last 2 years, quite frankly, in reducing inventory. And there's more to come."

Taylor confirmed the scale of the effort: "Over 1,500 SKUs have been taken out the assortment. The team has done an excellent job of navigating that while also supporting growth in the business. We do have a net reduction plan for '26, and the team is well underway on getting that executed."

The inventory numbers back up the executives' claims. Merchandise levels dropped 5.7% year over year in the quarter ending Jan. 30, down $379 million, EVP and CFO Donny Lau said. Stores averaged a 7% decline in inventory levels. Lau noted that merchandise levels stood at $6.3 billion for the quarter.

On the shelf availability side, the payoff is measurable. In-stocks in Q4 were up about 250 basis points above where they were in the same time period last year, Taylor noted, a direct result that matters in single-associate stores where a misplaced or out-of-stock item can sit for a full shift without anyone catching it.

The SKU rationalization, combined with smaller case packs, has directly improved "clean and in-stock" scores and reduced the labor hours required for stocking, according to a summary of the Q4 call. For store teams already stretched thin, fewer distinct items to receive, sort, and stock translates to a meaningfully different workday.

The supply chain behind those shelves is also being restructured. Taylor noted that Dollar General's distribution centers "are executing more aggressive seasonal sorts," which help move products to shelves faster. The retailer has also been leveraging its private truck fleet to help with better inventory movements, including fewer SKUs in-store, Vasos said. The efforts help support Dollar General's push to reduce the time spent stocking shelves, SKU rationalization and inventory optimization.

Vasos noted last quarter that SKU reduction has been a "big win" for the company, as prioritizing products with faster turnarounds helped lift the retailer's top line. Dollar General surpassed $40 billion in sales during fiscal year 2024 for the first time in company history, and reported record quarterly sales in the first quarter, with net sales rising 5.3% to $10.4 billion and same-store sales increasing 2.4%.

The CFO picture at Dollar General itself shifted during the period covered by the research notes. Donny Lau was named as EVP and CFO effective Oct. 20, 2025, following the departure of Kelly Dilts on Aug. 28, 2025. Inventory figures attributed to Kelly Dilts in earlier quarterly transcripts — including a 13% year-over-year decline in non-consumable inventory and a 17% per-store decline, as well as a 21-basis-point shrink headwind in Q2 — reflect her tenure. The numbers Lau presented on the March 12 call reflect the picture under his watch.

Several other retailers have also been slashing SKUs. Bath and Body Works, for instance, is adjusting its inventory mix due to customer complaints that the store is overwhelming. Lowe's is also pursuing leaner inventories, aiming to cut 15% of its SKUs by the end of 2025. Dollar General's pace puts it alongside a broader industry push to simplify store assortments after years of SKU proliferation that created congestion in back rooms, slowed replenishment, and frustrated store-level workers tasked with managing the clutter.

Taylor confirmed a net reduction plan is in place for fiscal 2026 and that "the team is well underway on getting that executed," signaling that the phase of counting past cuts is giving way to a forward-looking target with active execution already in progress.