Covid Slashed Consumer Choices. This Is Why They Aren’t Coming Back.

The furniture retailer Malouf sells beds and bedding in a fraction of the colours it did a few years ago. Newell Brands, the Sharpie maker, has retired 50 types of Yankee Candle. Coca-Cola offers half as many drinks.

Covid slashed consumer choices as companies pared their offerings to ease clogs in the supply chain. The logistical mess is behind them. But many of the choices aren’t coming back.

Retailers and suppliers across industries—from groceries to health, beauty and furniture—have said that it didn’t pay to offer products for everyone, and consumers didn’t care that much when they stopped.

“Today, people would rather lose a portion of consumer demand as opposed to spending extra on too much variety,” said Inna Kuznetsova, chief executive officer of ToolsGroup, a supply-chain planning and optimisation company.

Macy’s president and CEO-elect, Tony Spring, told analysts in November that “the customer today does not want an endless aisle.”

New items made up about 2% of products in stores in 2023 across categories such as beauty, footwear and toys, down from 5% of items in 2019, according to the market-research firm Circana. Shelf Engine, a technology company that automates ordering for grocery retailers, said large grocery stores have reduced fresh-food offerings such as fruit, dairy products and deli meats by 15% to 20%.

Large grocers cutting back on choice is a reversal from pre pandemic days, when they believed they had to carry everything to avoid losing customers to the store across the street, said Stefan Kalb, CEO of Shelf Engine.

Kalb said that grocers are now saving money because they have fewer items to manage and that the slimming of product options is reducing food waste.

Executives at consumer-product companies said the thinning of their product lines has been a relief for those struggling to improve profitability in the midst of higher interest rates and rising costs for raw materials and labor. They said many of the reductions have been in lines that consumers wouldn’t notice, such as items in special packaging and assortments for specific big-box retailers. The cutbacks are also to product lines that drown consumers in options.

“I don’t think any consumer would have noticed we went from 200 to 150” types of Yankee Candle, said Chris Peterson, chief executive of Newell Brands.

Some industry specialists said the new focus on bestselling items has reduced innovation and hurt smaller brands that rely on retailers’ desire to carry something for everyone.

“There has definitely been less innovation since the pandemic,” said Seth Goldman, a founder of the organic-beverage maker Honest Tea, which was bought by Coca-Cola in 2011 and discontinued in 2022.

Coca-Cola over the past few years reduced its brands to 200 from 400, cutting slow-growing as well as declining products, including small regional lines such as Northern Neck Ginger Ale and national brands such as its first diet cola, Tab.

“It was pruning the garden to let the better plants grow,” Coca-Cola Chief Executive James Quincey said in 2022.

Goldman said there was still demand for Honest Tea, even if it wasn’t big enough for Coca-Cola. In September 2022, four months after Coca-Cola’s announcement, he launched Just Ice Tea, a drink that he said is similar to Honest Tea and that is expected to have sales in 2023 of more than $16 million.

Companies began winnowing product lines in the years leading up to the pandemic as a corrective to previous decades when consumer choice ballooned. That was partly because of the internet, where online retailers weren’t constrained by the space limitations of physical stores, giving rise to the term “endless aisle.”

The cuts were turbocharged in 2020 and 2021, when product shortages and a surge in consumer spending led companies to give priority to the most in-demand items. They focused on products that ran fastest on production lines and, because of social distancing in factories, could be made with automated machinery.

Kimberly-Clark cut more than 70% of its toilet paper and facial-tissue products over a single weekend in 2020 as it rushed to satisfy a fourfold increase in demand, said Tamera Fenske, the company’s chief supply chain officer.

Fenske said the company jettisoned slow-selling items as well as many of the special counts and custom sizes it made for individual retailers. Fenske said that, as pandemic restrictions eased, Kimberly-Clark was able to be more thoughtful about the items it brought back. She said the company carries about 30% fewer product lines in North America than it had at the start of 2020.

PVH, which owns Tommy Hilfiger and Calvin Klein, embarked in 2020 on a plan to cut more than a fifth of its offerings to focus on what it calls “hero” products—those that make up an essential part of someone’s wardrobe.

Kimberly-Clark, maker of Scott paper towels, has brought back some, but not all, of the products it stopped offering during the pandemic. PHOTO: KRISTEN NORMAN FOR THE WALL STREET JOURNAL

Some companies said the culling of less-popular products opened up space for new lines.

Georgia-Pacific stopped selling 164-sheet rolls of Quilted Northern toilet paper because its larger rolls were better for consumers who valued longer-lasting rolls, said Kim Burns, senior vice president of supply chain for Georgia-Pacific’s consumer products group. Burns said the company has subsequently invested more time and money in new product lines, such as toilet paper with a scented tube that acts as a bathroom air freshener.

For other companies, the supply-chain shock provided a real-life experiment in how trimming product lines could improve productivity without hurting customer satisfaction. “It was quite shocking as we parsed it out to see we were using a lot of our buying power to really not get much of a return on investment,” said Nick Jensen, vice president of product at Malouf.

The Logan, Utah-based furniture company has reduced its lines to about 3,500 product choices, down from almost 11,000 items before the pandemic. Jensen said the company is adding new items more carefully these days.

“If we have 15 different colours and three shades of grey, it’s a paralysing choice,” Jensen said. “It’s kind of forced us to be much more intentional versus throwing a lot of things at the wall and hoping that they stick.”

—Suzanne Kapner contributed to this article.

Reporting season has once again reminded investors that a strong profit does not guarantee a rising share price, and a large loss does not always trigger a sell-off. What matters most is how each result compares with expectations and, increasingly, what management says about the year ahead. During the August 2026 season, companies offering credible turnarounds or unexpectedly strong guidance were rewarded handsomely, while those flagging weaker margins, slowing demand or greater uncertainty were punished.

The following ranking draws on Morningstar’s review of 164 ASX-listed companies and measures each company’s share-price movement on the day it reported. This captures the market’s immediate response to the earnings announcement, before subsequent economic developments, dividends and company-specific news cloud the picture. Here are the five biggest winners, and the five hardest-hit losers, of the season so far.

The five winners

1. Bapcor (ASX:BAP): +41.0%

Bapcor delivered reporting season’s largest relief rally after presenting early evidence that its troubled automotive-parts business was stabilising. Although underlying revenue fell 1.8% to $1.92 billion and underlying NPAT collapsed 85% to $10.8 million, underlying EBITDA of $152.5 million exceeded guidance.

More importantly, working-capital initiatives released $68.5 million in the second half, lifting cash conversion to 109.4% and reducing net debt by 63% to $135 million. The statutory loss was $431.6 million, largely because of non-cash impairments. Investors focused on improving operational momentum, stronger liquidity and management’s expectation of modest FY27 revenue growth.

2. Zip Co (ASX:ZIP): +18.2%

Zip comfortably surpassed its FY26 targets, sending the buy-now-pay-later provider’s shares sharply higher. Transaction volume rose 23% to $16.7 billion, while cash earnings before tax, depreciation and amortisation jumped 58% to a record $268.9 million. Statutory profit climbed 46% to $116.4 million, and the cash operating margin expanded by 4.2 percentage points to 20%.

The strongest signal was guidance for FY27 cash earnings of $340 million—around 26% growth and above analysts’ forecasts. US transaction volume increased 42.5% and now represents three-quarters of group volume, offsetting weaker customer activity in Australia.

3. CSL (ASX:CSL): +17.3%

CSL’s result was hardly spectacular in isolation, but it cleared a market bar that had fallen dramatically following earlier downgrades and restructuring announcements. Underlying NPATA was US$3.1 billion, down 2% in constant-currency terms, while operating cash flow reached US$3.51 billion.

CSL maintained its full-year dividend at US$2.92 per share and completed a A$1 billion buyback. The real catalyst was FY27 guidance for approximately 5% underlying profit growth, compared with market expectations closer to 2%. After an extended period of earnings disappointments, investors interpreted the outlook as evidence that CSL’s core plasma business was approaching a sustainable recovery.

4. Judo Capital (ASX:JDO): +16.9%

Judo Capital demonstrated strong operating leverage as its specialist business-lending franchise expanded. Full-year profit before tax rose 34% to $168.1 million, while pre-provision profit increased 42%. Gross loans and advances grew 18% to $14.7 billion, reaching the top of the bank’s guidance range and comfortably exceeding broader system growth.

Deposits increased 24% to $12.2 billion, return on equity improved by 1.1 percentage points to 6.4%, and earnings per share rose 29% to 9.9 cents. Reaffirmation of the FY27 outlook gave investors confidence that loan growth could continue without sacrificing margins or credit quality.

5. Super Retail Group (ASX:SUL): +15.8%

The owner of Supercheap Auto, rebel, BCF and Macpac reported record sales of $4.2 billion, up 3.2%, despite cautious discretionary spending. Profitability went backwards: normalised profit before tax fell 7% to $306 million and normalised NPAT declined 2.8% to $226 million as transformation spending weighed on margins. Nevertheless, the result exceeded subdued expectations, online sales grew 5.3% and membership across the group’s loyalty programs reached 13.1 million. Investors were also encouraged by positive early FY27 trading, stable gross margins and continued market-share gains. A fully franked 33-cent final dividend added to the appeal.

The five losers

1. Hansen Technologies (ASX:HSN): –21.2%

Hansen’s historic result met expectations, but investors recoiled from its outlook. The utility and communications software provider achieved an underlying EBITDA margin of 31%, exceeding its 30% target, while generating strong cash flow. However, management designated FY27 an “investment and transition year”, signalling a roughly five-percentage-point margin contraction as spending on products, sales capabilities and organisational changes increased.

Revenue had already been broadly flat, leaving investors concerned that the investment program would depress earnings before new growth appeared. Leadership changes, including the chief executive’s departure, added uncertainty. Management expects revenue growth and margins above 30% to return in FY28, but the market was unwilling to wait.

2. Life360 (ASX:360): –19.4%

Life360’s headline growth was impressive: quarterly revenue rose 38% to US$159 million, subscription revenue increased 31%, and adjusted EBITDA climbed 53% to US$31.1 million. Monthly active users reached 102.4 million and paying circles grew 27% to 3.2 million. The sell-off reflected expectations rather than a collapsing business.

Net income fell 18%, the net margin contracted from 6% to 3%, hardware shipments dropped 18%, and full-year EBITDA guidance was merely maintained. After a strong valuation run, investors wanted a larger upgrade and clearer evidence that heavy investment in advertising, international expansion and artificial intelligence would generate additional earnings.

3. PEXA Group (ASX:PXA): –17.0%

PEXA reported a 7% increase in continuing-operations revenue and 12% EBITDA growth to $152 million, accompanied by a two-percentage-point margin expansion. Free cash flow increased 39%, suggesting the core Australian electronic-conveyancing platform remained highly profitable. Investors instead concentrated on management’s warning that property-transfer volumes could decline, alongside regulatory uncertainty surrounding the fees PEXA can charge.

The company is also continuing to invest heavily in its loss-making international expansion. Morningstar considered the market reaction excessive, arguing that structural transfer-volume assumptions had not materially changed, but the combination of softer near-term activity and regulatory risk overwhelmed the respectable headline numbers.

4. SEEK (ASX:SEK): –14.3%

SEEK produced solid FY26 figures, including 10% revenue growth to $1.20 billion, a 15% rise in EBITDA and 28% growth in adjusted earnings per share. It also lifted its fully franked annual dividend by 13% to a record 52 cents. Those achievements were overshadowed by falling paid job-ad volumes and cautious FY27 assumptions.

The statutory accounts included a $201 million loss from the SEEK Growth Fund and $377 million of significant items, making the headline result considerably less attractive. Investors were particularly concerned that economic weakness could limit volumes while the company continued investing in platform integration and artificial-intelligence products.

5. JB Hi-Fi (ASX:JBH): –12.3%

JB Hi-Fi’s full-year result was broadly respectable, with group sales rising 5% to $11.1 billion and underlying earnings per share increasing 6% to $4.48. The damage came from its current-trading update. Australian sales were almost flat during the June quarter and deteriorated further in July, while earnings in the core Australian electronics business fell 3.6%.

Housing-related categories were particularly weak as higher living costs and interest rates constrained household budgets. With JB Hi-Fi entering the season on a demanding valuation, an in-line historic result was not sufficient: the loss of sales momentum prompted investors to rapidly reduce their expectations for FY27.

Overall, the season showed that share prices react less to whether profits rose or fell than to the gap between results and expectations. Bapcor was rewarded for being less troubled than feared, while several fundamentally profitable companies were punished because their outlooks failed to justify elevated valuations.