It seems plausible. Less common sizes have a lower chance of being sold out, so if they can no longer be destroyed at the end and need to be further managed at lower quantities, it can become more cost effective to simply not make them. Whether it is true or not, I don't know.

If your minimum run is 1000 of a size, and you can only really sell 500 because it's an uncommon size, and you would prefer to sell at full price or not at all, seems like making that size no longer fits your plans.

Currently, unpopular sizes are over-produced because they are subsidized by popular sizes. If the unpopular sizes have to be paid for, the logistics and production processes would push producers to under-produce popular sizes.

A key insight is that what constitutes an "unpopular size" is a very local phenomenon. Every point of retail sells a different, semi-predictable distribution of sizes. It is much cheaper to ship sizes no one will buy than to manage the logistics of exactly matching local demand for a specific distribution of sizes.

I asked the same question to someone who works in this business and got an eye-opening detailed explanation that made it obvious in hindsight why things the work the way the do. The difference in product cost and logistics infrastructure was not small.

Normally you can overproduce clothing and make three of every size or something, knowing that it only costs a couple bucks to make another shirt, for instance. And you can throw out if you make too many. If it's illegal to throw it out, maybe that raises the price from $2 to $4 because now you have to pay for storage for a long time. So you'll buy less inventory at the start, which usually means cutting less common sizes first

It's really different depending on if the manufacturer has Brand reputation or is just a replaceable good. For no name jeans, they probably just keep making them and donate the leftovers.

For a high-end designer dress, may be better to not manufacture large or small sizes that don't sell frequently.