“As a result, we've meaningfully reduced our fall season receipt commitments in many discretionary categories. With these reductions, we're projecting our DCs will remain at or below 85% capacity through the remainder of the year, even after the seasonal increase in holiday inventory that is set to occur over the next 2 months.”

In context

“by the end of the second quarter, less than 2 months later, our team had quickly reduced DC capacity utilization to below 80%. Put another way, by the end of the second quarter, the physical space occupied by our distribution center inventory was more than 20% lower than the peak we reached in June. So today, while we still have some individual sites where we need to make more progress, the team has accomplished a remarkable improvement in a very short time, which will allow our end-to-end operations to function more efficiently and effectively in the back half of the year. As Christina mentioned, beyond addressing the inventory we already owned, the team also took a hard look at sales trends and determined ideal inventory levels across every category for the remainder of the year. As a result, we've meaningfully reduced our fall season receipt commitments in many discretionary categories. With these reductions, we're projecting our DCs will remain at or below 85% capacity through the remainder of the year, even after the seasonal increase in holiday inventory that is set to occur over the next 2 months. In other words, for the first time I am aware of, our fall season inventory is projected to peak at a lower level than in spring, providing another vivid illustration of the unique dynamics we've encountered so far this year. While this inventory rightsizing process hasn't been easy and our teams have devoted an amazing amount of effort in a small amount of time, this work has allowed our teams to strengthen ongoing communication mechanisms and build new processes. Going forward, these improvements will enable our merchandising and supply chain teams to maintain enhanced real-time communication, particularly with respect to categories where we face the highest inventory risk, allowing us to respond to changes with more speed and agility. While pressure from excess inventory has pre”