Public DTC Wrote Down 1.2% of Revenue in 2025: What Your $50M Brand Should Budget

Most apparel and DTC founders I talk to do not budget for inventory write-downs at all. They treat them like a one-off problem that hits sometimes. That is wrong. Every public DTC issuer in our sample wrote down inventory in FY2025, and the typical write-down was 1.2% of revenue. For a $50M brand that is between $500K and $1M of cash you should expect to burn every single year on obsolescence, season turn, and the accounting rule that forces you to mark down stock once its market value drops below what you paid.

This is the 13-company benchmark we pulled from SEC EDGAR 10-K filings, blending direct write-down disclosures with analytical proxies (inventory reductions, gross margin compression) where peers do not break the line out separately. Companies covered: Lululemon (LULU), Crocs (CROX), Vita Coco (COCO), YETI, Revolve (RVLV), Warby Parker (WRBY), FIGS, Stitch Fix (SFIX), Honest Co (HNST), Purple Innovation (PRPL), Beachbody (BODI), Beyond Meat (BYND), Allbirds (BIRD). Combined revenue: $23.5B. Write-down range: 0.3% to 7.0% of revenue. Median: 1.2%.

If you are sitting on aging inventory and have not yet had the markdown conversation with your accountant, you are about to. The auditor does not let you carry $100 jackets at $100 on the balance sheet when the market clears at $60. They force the markdown. The only question is whether you plan for it or it ambushes you at year-end.

What inventory write-downs actually are (and why the auditor forces them)

An inventory write-down is when you reduce the carrying value of inventory on your balance sheet because its market value has dropped below what you paid for it. The accounting rule is called lower of cost or net realizable value, often abbreviated LCNRV. It is GAAP, it is not optional, and every external auditor on every year-end audit checks it.

Here is how it works in practice. You buy 10,000 units of a jacket at $50 cost. Twelve months later, the season has turned, the style is dated, and your liquidator will only pay $25 a unit. The accounting rule says your inventory is now worth $25 a unit, not $50. You take a $250,000 write-down ($25 reduction times 10,000 units). That $250,000 hits cost of goods sold in the period you take it, which crushes that period's gross margin and operating income.

Three triggers force a write-down:

1. Obsolescence: the product is dated, the season passed, or a newer version replaced it. Apparel, footwear, beauty, and tech-adjacent goods are all exposed.
2. Lower of cost or market: input prices fell, so the same product can be replaced at lower cost today. If your supplier now sells the same fabric for 20% less than what you paid 18 months ago, your auditor will haircut your inventory.
3. Damaged or unsellable: warehouse damage, expiry on perishables, returns that cannot be resold at full price.

For ecommerce operators, the painful one is the second trigger. Apparel input prices have fallen sharply since 2023. Brands that overbought during the 2021-2022 supply chain panic are now writing it down at market.

What public DTC actually wrote down in FY2025

Here is the chart. 13 public DTC issuers, latest fiscal year, write-downs as a percent of revenue. Sorted from worst to best.

The top 5 most affected, in order:

• Allbirds (BIRD) at 7.0% of revenue. On $152M revenue, that is roughly $10-11M in write-downs. Allbirds is the cohort cautionary tale: declining brand momentum, inventory that does not clear, and a category (sustainable footwear) where the demand curve fell faster than the order plan adjusted. Their inventory dollars dropped from $116M (end of FY2022) to $44M (end of FY2024). That kind of inventory reduction at flat-to-declining revenue is the textbook signature of heavy obsolescence write-downs.
• Beyond Meat (BYND) at 4.5% of revenue. On $275M revenue, roughly $12M in write-downs in FY2025. Better than the catastrophic FY2023 (where the company disclosed a discrete $76M reorganization-and-inventory write-down) but still 4x the cohort median. Plant-based meat carries short shelf life, which compounds with overbuilt capacity and softening demand.
• Beachbody (BODI) at 3.5% of revenue. On $252M revenue, about $9M. Inventory dollars collapsed from $133M (FY2021) to $16M (FY2024) as the company wound down hardware (Bike, Bodi 360). Most of that disappearance was written down, not sold.
• Purple Innovation (PRPL) at 2.0% of revenue. On $469M revenue, roughly $9M. Mattress overbuild from 2022 is still being worked through.
• Honest Co (HNST) at 1.8% of revenue. On $371M revenue, about $7M. CPG with short shelf life and meaningful retail channel risk.

The well-run brands sit at 0.3% to 0.5%. Lululemon at 0.3% on $11.1B revenue is roughly $33M of write-downs, which sounds large but is structurally low for an apparel business at that scale. It is the floor of what a category-leading premium apparel brand looks like.

The 3-year trend: write-downs are getting worse for the wounded peers

Here is what the 3-year trend looks like for the 6 peers carrying the heaviest write-down burden.

Three patterns stand out. Allbirds is the only peer where write-downs as a percent of revenue are still rising, climbing from ~4.5% in FY2023 to 7.0% in FY2025. That is a structurally broken inventory model, not a one-off correction. Beyond Meat is improving off a catastrophic FY2023 when the company took a discrete $76M write-down disclosed in MD&A, but at 4.5% in FY2025 they are still 4x the cohort median. Beachbody, Purple, Honest Co, and Stitch Fix are all stuck between 1.5-3.5% with no clear improvement trajectory.

The lesson for private operators: once write-downs cross 2-3% of revenue, they tend to stay there for 2-3 years. It is rarely a one-period event. The underlying problems (over-forecasting, weak SKU discipline, channel-mix issues) take multiple cycles to fix.

The macro reason: when apparel PPI drops, write-downs spike

This is the chart most operators have not seen. The Producer Price Index for apparel (the wholesale input-price index published monthly by the U.S. Bureau of Labor Statistics) peaked in January 2023 at 268.9 and has fallen to 201.6 as of April 2026. That is a 25% decline in apparel input costs in 39 months.

Compare that to other consumer goods PPI, which rose steadily from 150 to 167 over the same period. The apparel decline is category-specific and severe.

Here is why this matters for the write-down line. If you bought your fall 2023 inventory at peak apparel PPI (let's say cost of goods at $50 a unit), and the same product can now be replaced at roughly $37 a unit, the accounting rule forces you to value any aging inventory at the lower replacement cost. Your $5M of fall-2023 inventory sitting in the warehouse becomes worth $3.7M at year-end, and the $1.3M difference hits COGS as a write-down. That is the mechanism that drove the 2024-2025 write-down spike across the apparel cohort.

It is not just apparel. The same dynamic hit beauty (input chemicals fell), CPG food (commodity oils retraced), and electronics-adjacent DTC (semiconductor and component prices fell after the 2022 squeeze). Anywhere input prices peaked then fell, the brands that overbought at peak are now writing it down at market.

The pattern: inventory days predict write-downs (but not cleanly)

Every dot is one issuer. The trend is real (more days, more risk) but messy. YETI sits at 388 inventory days with only 0.5% write-downs because hard goods (coolers, tumblers, drinkware) do not go out of fashion. A YETI tumbler in 2025 is the same product as in 2023. There is no season turn. Allbirds sits at 148 days with 7.0% write-downs because apparel and footwear go out of fashion every season, and a 2024 colorway that did not sell is structurally less valuable in 2026.

The honest takeaway: inventory days are a leading indicator, not a complete one. Days matter more for fashion-sensitive categories and less for durable goods. A $50M apparel brand at 150 inventory days should expect higher write-downs than a $50M housewares brand at the same days. Benchmark against your category, not your days alone.

Why this matters for your business

If you are running a $5M-$150M private DTC or apparel brand, the public benchmarks translate directly into your annual planning. Here is how to use them.

What percent to reserve at $50M

Plan for 1.0% to 2.0% of revenue as your annual inventory write-down budget. At $50M revenue, that is $500K to $1M. If you are in a fashion-sensitive category (apparel, footwear, beauty trend SKUs, seasonal home), use the high end. If you are in durable hard goods (kitchenware, tools, evergreen CPG), use the low end. Build the reserve into your monthly P&L and your cash forecast, not the year-end true-up. If you are running over 3% of revenue in write-downs, your forecasting and SKU discipline are broken, and no amount of better merchandising fixes a system that systematically over-orders.

Three categories that age fastest (and burn first)

Across the portfolio brands at Eightx, three inventory categories drive 80% of write-down losses:

1. Seasonal apparel and footwear. Anything tied to a specific season (spring fashion, swimwear, holiday-themed) loses 30-60% of value the moment the season ends. If it is not sold through by week 12 of the season, it is markdown territory. Build pre-season sell-through models and aggressive end-of-season clearance into the merchandising plan.
2. Short-shelf-life CPG. Food, beauty actives, supplements, anything with a printed expiry. Inventory aging into the last 30-60 days of shelf life is unsellable through normal channels. The brands that do this well run weekly aging reports and route at-risk SKUs to liquidators 60+ days before expiry.
3. Fad-driven or technology-adjacent goods. Connected fitness equipment, novelty drinkware shapes, single-use beauty tools tied to a viral moment. The demand curve is steep up and steep down. Cap your initial order quantities, build re-order discipline, and accept that fad-driven SKUs require active inventory management for the full life cycle.

The quarterly review that catches obsolescence early

Most brands do an inventory aging review once a year at audit time. By then it is too late. Run a quarterly inventory aging report by SKU. Bucket inventory into 0-90 days, 91-180 days, 181-270 days, and 270+ days. Anything sitting in the 270+ bucket is a write-down candidate. The conversation you want is: do we mark it down and clear it through liquidation now (recover 30 cents on the dollar), or do we hold and hope (and likely recover 10 cents on the dollar at year-end audit)? Quarterly cadence forces the conversation 9 months earlier than the auditor would. Earlier means more cash recovered. The brands at the bottom of our cohort (Lululemon, Crocs, Vita Coco, YETI) all run quarterly or monthly SKU aging discipline. The brands at the top (Allbirds, Beyond Meat) discovered the problem at year-end.

Frequently asked questions

what is an inventory write-down and why does the auditor force it?

An inventory write-down is when you reduce the value of inventory on your balance sheet because its market value dropped below what you paid for it. The accounting rule is called lower of cost or net realizable value, and your auditor enforces it every year-end. If you paid $50 a unit for jackets that you can now only sell at $30 because the season passed or the input cost fell, you have to mark them down to $30. That $20 difference per unit hits cost of goods sold and crushes gross margin in the period you take the write-down. You do not get to defer it.

what percent of revenue should a $50M DTC brand budget for inventory write-downs?

Based on the 13-company public DTC sample we ran for FY2025, plan for 1.0% to 2.0% of revenue as the realistic budget. The median was 1.2%. At $50M revenue, that is $500K to $1M of inventory you should expect to burn every year just from obsolescence, season turn, and lower-of-cost-or-market adjustments. The well-run brands in the sample (Lululemon, Crocs, Vita Coco, YETI) sit under 0.5% because of brand pricing power and tighter forecasting. The wounded brands (Allbirds 7%, Beyond Meat 4.5%) sit dramatically higher because they overbought against a demand curve that fell.

why are write-downs spiking in 2024-2025 across DTC?

Two reasons. First, apparel PPI (the wholesale input-price index for apparel) fell 25% from the January 2023 peak through April 2026. Inventory bought at peak prices now sits on warehouse floors with market value 20-25% below cost, and accounting rules force the markdown. Second, DTC demand softened after the 2021-2022 over-order cycle, so peers like Allbirds, Beyond Meat, and Purple are still working through inventory they bought for a customer base that did not show up. The PPI drop and the demand drop happened at the same time, which is why the write-down line spiked in FY2024 and FY2025.

do more inventory days always mean more write-downs?

More days correlate with more write-downs but the relationship is not clean. YETI sits at 388 days inventory with only 0.5% write-downs because YETI hard goods (coolers, tumblers) do not go out of fashion. Allbirds sits at 148 days with 7% write-downs because apparel and footwear do go out of fashion every season. Brand pricing power matters more than days alone. Category economics matter more than days alone. Days are a signal, not the answer. A $50M apparel brand at 150+ days should expect higher write-downs than a $50M housewares brand at the same days.

which three inventory categories age fastest and burn first?

In the brands we work with, three categories drive 80% of write-down losses. First, seasonal apparel and footwear loses value the moment the season turns; if it is not sold by week 12 of the season, it gets marked down. Second, perishable or short-shelf-life CPG (food, beauty actives, supplements) loses value as expiry approaches. Third, technology-adjacent or fad-driven goods (connected fitness, single-use beauty, novelty drinkware) lose value when the demand cycle shifts. Run a quarterly aging report on your inventory by SKU. Anything over 180 days sitting at full cost on the balance sheet is a write-down waiting to happen.

Sources and methodology

Financial figures sourced from SEC EDGAR 10-K annual report filings for the 13 issuers covered (most recent 3 fiscal years through FY2025). Apparel PPI (series WPU0911) and Other Consumer Goods PPI (series WPU0381) sourced from the U.S. Bureau of Labor Statistics, January 2022 through April 2026. Write-down percentages combine: (1) explicitly disclosed write-down amounts in MD&A or footnotes where available, (2) analytical proxies from inventory reduction patterns and gross margin compression where peers do not break out a discrete write-down line. The discrete-line disclosure varies by issuer; Beyond Meat, Allbirds, Beachbody, and Purple all disclose explicit write-downs in MD&A, while Lululemon, Crocs, Revolve, and YETI report inventory reserves only in footnotes. Cohort statistics: median write-down 1.2% of revenue (range 0.3% to 7.0%); 4 of 13 peers above 2% (red zone); 3 of 13 between 1% and 2% (amber); 6 of 13 below 1% (green).