Dive Brief:
- Bath & Body Works Q2 earnings exceeded the company’s expectations, with net sales down 2.3% year over year to $1.5 billion, according to a Wednesday press release. Direct to consumer saw positive growth for the first time since 2021.
- The company narrowed its full-year net sales guidance, which is now expected to decrease between 2.5% to 4%, compared to its previous forecast of down between 2.5% and 4.5%.
- “Returning Bath & Body Works to sustainable growth is a multiyear transformation,” CEO Daniel Heaf said on a call with analysts. “2026 remains an investment year.”
Dive Insight:
The transformation blueprint that Bath & Body Works laid out last November is going to take time, but “we’re delivering against that strategy, and we are exactly where we expect it to be at this stage,” Heaf said.
The retailer has decided to completely exit home care, which includes its laundry and kitchen products. The category represents less than 1% of the company’s annual sales. A pullback on the laundry offering was first announced in the spring.
Yet, in the quarter the retailer embarked on some large initiatives to push its Consumer First Formula transformation strategy forward.
Those efforts included completing the largest merchandising project in a decade with stores, which included organizing scents by fragrance type and coordinating product walls around the categories of body care, hand soaps and home fragrance.
“We’re very aware that stores remain under pressure, and we don’t expect it to just improve by putting new products in there,” Heaf said. “We have got to do more to earn a visit.”
Earlier this summer, the company introduced its Fruit Fusion franchise with the aid of brand ambassador and creative partner Hilary Duff, which exceeded the company’s sales expectations this quarter. Bath & Body Works will add two new fragrances next quarter and will continue to invest in the line.
Fruit Fusion shows that the retailer has a willingness to push boundaries, according to Neil Saunders, managing director of GlobalData.
“The Fruit Fusion range landed well and helped to drive a better performance in body care and push up average selling prices,” Saunders said in written comments. “This type of innovation is clearly the right remedy for breaking through the growth barriers — and we are encouraged by the fact that there is a lot more of it in the pipeline across many of the categories that Bath & Body Works sells.”
Net sales on Amazon more than tripled compared to Q1. The retailer launched a curated selection of products on the e-commerce giant in February. The channel is attracting new customers who skew younger and more affluent, according to executives.
The company also launched at 600 Ulta Beauty locations during the quarter, as an additional way to make it easier for new customers to access the Bath & Body Works brand.
“This is the playbook: Create products that people want, tell stories that people remember and make it easier to discover and buy,” Heaf said.
