Bath & Body Works Rewrites Promotional Inventory Planning: Put the Markdown Risk in the Purchase Order

Promotional inventory is often treated as a merchandising bet and a logistics problem only after the bet goes wrong. A large seasonal purchase order arrives, demand misses the forecast, and transportation and distribution teams inherit the task of moving, storing, and eventually clearing the excess.

Bath & Body Works is taking a different position. The retailer says it is buying seasonal merchandise more carefully and relying less on semiannual sales to flush excess stock. That shift offers a practical lesson for any retailer: markdown risk should be visible when the purchase order is approved, not discovered when the clearance calendar begins.

A cleaner inventory position changes the buying question

Supply Chain Dive reported that Bath & Body Works entered its June semiannual sale with less clearance inventory and ended its second quarter with overall inventory down 10% year over year. CEO Daniel Heaf said the company had reduced distressed stock by buying its seasonal business correctly and was not seeking to purchase large quantities simply to clear them through semiannual sales.

This is more than a decision to run fewer promotions. It changes the purchasing objective from “buy enough for the event” to “buy the amount whose full lifecycle economics remain acceptable.” That lifecycle includes inbound freight, storage, handling, transfers, clearance labor, reverse logistics, and the margin sacrificed in a markdown.

The change follows a broader assortment reset. In December 2025, Supply Chain Dive noted that Bath & Body Works planned to leave underperforming categories such as men’s grooming and hair products. Its inventory at the end of that third quarter was about $1.3 billion, compared with roughly $1.2 billion a year earlier. Fewer low-productivity SKUs can make demand signals easier to read, but the remaining seasonal buys still need explicit controls.

Split the forecast into three decisions

A single promotional forecast hides three economically different quantities. The first is base demand: units likely to sell without the event. The second is event uplift: incremental units attributable to the promotion, placement, media, or price. The third is residual inventory: units expected to remain when the event ends.

Planners should keep those components separate by SKU, location cluster, and week. Base demand can justify a firmer commitment because it has more selling opportunities. Event uplift deserves a confidence range rather than a single number. Residual units need an exit value that reflects their likely markdown, transfer, storage, or disposal cost.

The purchase-order decision then becomes a risk-adjusted calculation. A high forecast is not automatically a large order. The planner should compare expected gross margin with the cost of the downside case, including freight already booked and capacity consumed by slow-moving stock. This is particularly important for fragrances, packaging, and seasonal designs whose value can fall sharply after a launch window.

Turn one large commitment into controlled milestones

Retailers do not need perfect forecasts to reduce markdown exposure. They need purchase orders that preserve choices. A promotional program can use an initial commitment, a production reservation, and one or more release milestones rather than treating the full forecast as irrevocable on day one.

Each milestone should have a date, an owner, and a measurable trigger. Before production, the buyer might review preorder demand, campaign engagement, comparable-product sales, and store allocation. Before the final release, the team can assess early sell-through, available-to-promise inventory, supplier lead time, and inbound capacity. The result can be to release the balance, expedite a smaller quantity, defer it, or cancel within agreed terms.

This structure requires procurement and logistics data to meet. Cancellation dates are useless if transportation has already been contracted. A replenishment option is not real if the supplier’s production window or ocean cutoff makes it impossible. The purchase order should therefore record supplier lead time, minimum order quantity, release windows, cancellation liability, mode assumptions, and required delivery dates alongside the commercial quantities.

Use four metrics to govern the event

Four measures give planners and transportation teams a shared operating view:

• Sell-through: units sold divided by units available during a defined period. Measure it against the event curve, not only at the end.
• Markdown exposure: units expected to remain multiplied by the forecast reduction from full-price margin. Include handling and storage where material.
• Service level: demand fulfilled on time and in full. A lean buy that repeatedly creates stockouts is not a win.
• Inventory productivity: gross margin generated relative to average inventory investment. This keeps attention on economic return rather than unit volume alone.

Thresholds should trigger action. If early sell-through is above plan and supplier lead time still fits the selling window, release replenishment. If it is below the lower bound, stop the next commitment and rebalance inventory before ordering more. If service declines in only a few locations, transfer stock selectively rather than raising the national buy.

Technology adoption is already moving in this direction. An MHI survey covered by Supply Chain Dive found that 54% of respondents planned to increase investment in inventory and network optimization technology. At the time, 45% said those tools were already in use, up from 40% the prior year. The useful capability is not merely a better forecast; it is connecting the forecast to executable buying, allocation, and freight decisions.

Give transportation teams an earlier signal

Milestone-based buying also improves freight planning. Instead of receiving a final quantity after space must be booked, transportation teams can see a range: committed volume, optional volume, earliest release, and last acceptable arrival. They can reserve flexible capacity, compare modes, consolidate confirmed orders, and avoid paying to expedite inventory whose economics no longer support a full-price sale.

The same data helps distribution centers plan labor and storage. Expected residual stock can be included in capacity scenarios before a promotion starts. Planners can identify which products are transferable across stores, which remain saleable after the event, and which carry the highest obsolescence risk. That makes the downside operationally manageable rather than a surprise.

Bath & Body Works’ approach is a reminder that the cheapest unit is not the one purchased at the best factory price. It is the one bought in the right quantity, delivered within the useful selling window, and sold without an avoidable markdown. Putting those conditions into the purchase-order workflow makes promotional planning measurable from commitment through sell-through.

Control promotional inventory with CXTMS

CXTMS connects purchase-order milestones, inbound transportation, inventory visibility, and shipment exceptions so teams can align promotional commitments with real logistics constraints. Request a CXTMS demo to see how better execution data can reduce markdown exposure without sacrificing service.