Dive Brief:
- Bath & Body Works reported Q3 results that were below expectations, according to a Thursday press release. The company lowered its full-year guidance and expects net sales to be down high single digits in Q4, reflecting current business trends and recent macro consumer pressures.
- The retailer is embarking on a “Consumer First Formula” strategy to drive sustainable, long-term growth.
- Bath & Body Works will also exit categories that have not been successful, including hair and men’s grooming, CEO Daniel Heaf said on an earnings call with analysts.
Dive Insight:
Bath & Body Works’ quarterly results and lowered guidance aren’t living up to the company’s expectations.
“The brand is not fulfilling its potential,” Heaf said.
The company’s third quarter delivered net sales of $1.6 billion, down 1% year over year. Net income decreased more than 27% to $77 million.
“We declined in each of our core categories,” Heaf said. A focus on adjacent products “has resulted in underinvestment in our core and not keeping pace with our consumer.”
For example, some of the company’s biggest fragrances currently deliver over $250 million in sales annually, “and they sit on a shelf in the left-hand side of our store,” Heaf said. “Customers come in and they buy them, but we haven’t treated them with the reverence and with the marketing they expect.”
The company identified a number of additional points of friction, including too much reliance on collaborations, frequent promotions and a lack of growth in its total customer base.
The company’s Consumer First Formula is the answer to get things on track, according to executives.
The strategy has four pillars, including returning to product leadership in its core categories of body care, home fragrance, soaps and sanitizers; reigniting the brand by investing in marketing; expanding the road to discovery through third-party channels; and delivering $250 million in cost savings over the next two years.
“This is really about going back to what made this company so great but evolving to meet the needs of today's consumer,” Heaf said.
The marketplace expansion means the company will launch on Amazon in 2026, in part to recover between $60 million to $80 million gray market sales that are already happening on the platform.
Bath & Body Works is also interested in targeting and marketing to a younger demographic. The company this year brought some of its top-selling beauty products to 600 college campus stores in its largest distribution effort outside of its own stores.
The retailer this month brought on former Bluemercury CEO Maly Bernstein as its chief commercial officer, a newly created role within the company.
