Dive Brief:
- Bath & Body Works reported Q1 net sales were down 3% year over year to $1.4 billion, and net income was $183 million, up over 74%, according to a company press release.
- The retailer reiterated that it is staying the course with its Consumer First Formula strategy to drive growth. “We are in the early stages of transforming Bath & Body Works from a specialty retailer to a category-leading global brand,” CEO Daniel Heaf said on a Wednesday call with analysts.
- CFO Eva Boratto will step down from her role, effective June 12. Tom Javitch, who has been with the retailer for over 16 years, has been appointed as interim chief financial officer, and the company has hired an executive search firm to identify its next CFO.
Dive Insight:
Bath & Body Works reported a Q1 that exceeded guidance but remains “below the standard our brand is capable of delivering,” Heaf said in a statement.
Yet, the executive stated that the company remains on track with its transformation plan, which is a multiyear undertaking.
“The problem for BBW isn't that it's a terrible company or brand,” Neil Saunders, managing director of GlobalData, said in emailed comments. “On the contrary: it is a victim of its own success. BBW has such a high market share in some of its categories that it not only struggles to expand but also suffers from rival brands nibbling away at sales.”
Body care specifically underperformed in Q1, declining in the mid-teens.
The company needs to lean more into innovation, per Saunders, specifically with body and skin care products. “The current indulgent and treat focus of the brand also needs to be married with a more scientific approach to solving skincare and wellness needs — which continues to be a huge area of growth,” he said.
The retailer at the start of the year launched a storefront on Amazon as a way to support its transformation plan. Bath & Body Works currently has around 94 SKUs on Amazon, representing about 7% of its active in-store assortment, and is driving new customers that skew younger and more affluent, per Heaf.
“Amazon is really helping to improve our recommendations in generative search in platforms like ChatGPT and Claude. So, again, something that we are watching, and perhaps an unexpected benefit of the expansion onto Amazon,” Heaf said.
The company is rolling out streamlined store navigation to its full fleet starting in July. Consumers will encounter clearer signage and product layout, where items are grouped by fragrance, form and franchise.
Additionally, later in the year the company aims to improve its digital presence by relaunching its website.
Bath & Body Works is maintaining its full-year guidance, with net sales forecast to be down between 2.5% and 4.5%. In Q2, net sales are predicted to decline between 3% and 5%.
