Bath & Body Works plans to grow sales and attract new customers by expanding overseas and broadening its assortment, executives said Thursday. The retailer added men’s grooming products ahead of Father’s Day. The company will also offer more sustainable formulas and, in July, will introduce hair care products into 560 stores and online.
The company said Q1 sales fell 3.7% to $1.4 billion, with e-commerce sales in the U.S. and Canada down 12%. Net income fell 47.7% to $81 million, according to a company press release. Gross margin declined 340 basis points to 43%, Chief Financial Officer Wendy Arlin told analysts.
In the quarter the company opened 16 new off-mall North American stores and permanently closed eight, principally in malls. The chain’s fleet is now half in malls and half off-mall, with a goal to get to two-thirds off-mall, Arlin said. Abroad, the brand opened nine new stores, ending Q1 with 436.
During the height of the pandemic, people flocked to Bath & Body Works for cleansers, sanitizers and candles, but, with demand for those items down, the retailer is scrambling to figure out ways to grow.
That’s especially tricky at a time when consumers, still facing elevated prices on many essentials and uncertain about the economy, are hesitant to spend, according to GlobalData Managing Director Neil Saunders. Already the leader in many consumer products, fragrance and candles, the company is now moving into new areas, like its men’s business.
“Going forward we expect more new launches and initiatives as Bath & Body Works looks to bolster its already successful core business,” he said in emailed comments. “Thankfully, the new ideas are not coming at the expense of the existing business. We remain impressed by the regular refreshes of the range at Bath & Body Works and the strong seasonally-relevant merchandising across stores and online.”
CEO Gina Boswell, who arrived from Unilever in December, said that the company’s new loyalty plan, unveiled last summer, has enrolled 37 million members so far. Sales via the program have driven about two-thirds of the company’s U.S. sales, and those customers spend more and make more trips to the store.
The first quarter results reveal a retailer with many yet-to-be-realized plans, following not just its pandemic-related success but also its separation from Victoria’s Secret in 2021. Wells Fargo analysts led by Ike Boruchow said that the company, with contracting sales and squeezed margins, “is clearly in transition” and that “many questions remain.”