Sale signs inside the Bath and Body Works store in Edmonton. Thursday, January 6, 2022, in Edmonton, Alberta, Canada.
Arthur Widak | Nuphoto | Getty Images
Bath and Body Works Inc. The stock plunged Thursday after the company reported “disappointing” third-quarter results and cut its full-year outlook, citing “macroeconomic pressures on consumers.”
Shares fell nearly 25% on Thursday and hit a new 52-week low. The stock has plunged more than 50% this year.
CEO Daniel Heaf announced a turnaround plan for the company, with expectations of $250 million in cost savings by 2027, aimed at attracting younger consumers and refocusing the company’s attention on its core products.
“Our third quarter results fell short of expectations and we are lowering our outlook for the remainder of the year, reflecting current business trends and continued recent macroeconomic pressures on consumers,” Heaf said in a statement. “While this is disappointing, we are moving quickly and decisively to position the company for long-term, sustainable growth.”
Here’s the company’s third-quarter performance, compared to Wall Street estimates, according to a survey of analysts by LSEG:
- Earnings per share: 35 cents adjusted versus 39 cents expected
- Income: $1.59 billion versus $1.63 billion expected
Bath & Body reported net income of $77 million, or 37 cents per share, for the quarter ended Nov. 1, compared with $106 million, or 49 cents per share, last year. Taking into account one-time items, including pre-tax gains, the company reported earnings of 35 cents per share.
The company also reduced its annual guidance due to “current business trends.” He also expects fourth-quarter revenue to be down in the high single digits, compared with Wall Street estimates of a 1.5% increase. The forecast, drawing on “recent negative consumer sentiment” and the impacts of tariffs, also revised the full-year net sales forecast to the low single digits.
Heaf said the company is shifting its strategy to focus again on core products such as body care, fragrances and soaps. The plan, called the Consumer First Formula, includes four strategic priorities: creating disruptive and innovative products, relaunching the brand, winning in the market, and operating with speed and efficiency.
The company had previously considered introducing other products like laundry detergent and shampoo, but Heaf said on a call with analysts Thursday that its efforts had not yielded promising results or attracted younger consumers.
Heaf said the company will exit some categories like hair care and men’s grooming as it refocuses its priorities.
“Over the years, consumers have evolved. They are looking for greater efficiency, ingredient-driven products, modern packaging, emotional storytelling and enhanced multi-channel experiences,” Heaf said. “Our competitors have been able to meet these needs. We have not.”
Heaf said on the call that the company is also recruiting influencers to “spark social buzz” around the company’s products in an effort to attract the attention of new consumers.
Bath & Body Works also plans to revamp its app and website to increase engagement and make product discovery easier. The company will also lower its free shipping threshold in early 2026.