Bath & Body Works’ share price has plunged after announcing a turnaround plan amid softer sales.
The US beauty and personal care brand and retailer reported that its sales fell 1% to US$1.6bn in the third quarter, and lowered its outlook for the year as a result.
Bath & Body Works’ share price fell 32% following the financial results.
“Our third quarter results were below expectations, and we are lowering our outlook for the remainder of the year reflecting current business trends and continuation of recent macro consumer pressures,” said Daniel Heaf, CEO of Bath & Body Works.
“While this is disappointing, we are acting swiftly and decisively to position the business for sustainable, long-term growth.
“Consumers will begin to see the benefits of these changes in the coming quarters, though it will take time for the impact to be reflected in our financial performance.
“While we have significant work ahead, I am confident in Bath & Body Works’ bright future and the immense opportunity in front of us.”
Heaf joined the business in May from footwear and apparel brand Nike, where he was Chief Strategy and Transformation Officer.
After being “deeply immersed” in the business for the past six months, Heaf said he remains as “confident as on his first day” that Bath & Body Works “possesses unique enduring strengths” and is “an iconic American brand with loyal customers and a business model that generates healthy margins and cash flow”.
He added: “Our enduring strengths combined with our ‘Consumer First Formula’ investments will create the engines required to drive sustainable long-term growth.”
Outlining a turnaround plan for Bath & Body Works, Heaf said the business would focus on four areas: brand, product and marketplace, as well as speed and efficiency.
“This plan, the ‘Consumer First Formula’, focuses our investments in our four largest revenue driving opportunities – creating disruptive and innovative products, reigniting our brand, winning in the marketplace, and operating with speed and efficiency,” said Heaf.
These initiatives aim to attract new, younger consumers to the brand and unlock our next era of growth.”
What is Bath & Body Works’ ‘Consumer First Formula’ turnaround plan?
Product innovations at Bath & Body Works will focus on its core categories of body care, home fragrance, soaps and sanitisers.
The business will focus on delivering “ingredient-led formulas, sensorial excellence and elevated storytelling”, it said in a statement, “while simplifying our assortment to focus on trend-right innovation”.
To reignite the brand as part of its ‘Consumer First Formula’ strategy, Bath & Body Works will also focus on “more targeted brand moments and deeper creator advocacy”.
“We will build enduring fragrance franchises around iconic scents, paired with elevated visual storytelling and social momentum across all consumer touchpoints,” the company said in a statement.
Bath & Body Works will aim to enhance in-store experiences and expand into new wholesale channels to “win in the marketplace” to meet customers wherever they are.
Cost savings of $250m have been identified over the next two years, with half coming in 2026 to fund the new initiatives across product and brand.
“We will transform Bath & Body Works to be a faster and more efficient organisation,” the company said.
“Work has already begun, and we will continue to break down silos, speed up decision-making and strengthen the agile operating model that makes this company great.
“Future growth will be funded through continued operational discipline.”
Why does Bath & Body Works need a turnaround plan?
Bath & Body Works announced plans for revitalising the business as it revealed a 1% decline in sales in the third quarter to $1.6bn – analysts had expected a 1.5% rise.
Earnings per diluted share in the third quarter to 1 November were $0.37, down from $0.49 in the same period last year.
Operating income was $161m, a 26% decline on the $218m for the third quarter of 2024, while net income of $77m was down 27% from $106m.
Looking ahead to the fourth quarter, which covers the holiday season, the brand expects net sales to decline in the high single-digits.
This reflects “the continuation of recent negative macro consumer sentiment weighing heavily on our consumers’ purchase intent,” the company said.
The outlook also reflects the anticipated impact of US President Donald Trump’s tariffs.
It means for the full 2025 financial year, Bath & Body Works now expects a decline in sales in the low single-digits.
Previously sales had been expected to grow between 1.5% and 2.7%.
The updated full year guidance also includes the anticipated impact of $400m of cash deployed towards share repurchases.
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