Bath & Body Works(BBWI) - 2026 Q3 - Quarterly Report

Financial Performance - Total Net Sales for Q3 2025 were $1.594 billion, a decrease of $16 million, or 1.0%, compared to Q3 2024[96] - Operating Income for Q3 2025 was $161 million, down $57 million, or 26.1%, with an Operating Income rate of 10.1%, down from 13.5%[96] - Gross Profit for Q3 2025 was $658 million, a decrease of $42 million, with a Gross Profit rate of 41.3%, down from 43.5% in Q3 2024[111] - For year-to-date 2025, total Net Sales were $4.567 billion, an increase of $47 million, or 1.1%, compared to year-to-date 2024[121] - Operating Income for year-to-date 2025 was $527 million, a decrease of $61 million compared to year-to-date 2024, with an Operating Income rate of 11.5%[118] - Gross Profit for year-to-date 2025 was $1.945 billion, an increase of $12 million, with a Gross Profit rate of 42.6%, down from 42.8% in year-to-date 2024[122] - Net sales for year-to-date 2025 were $4,358 million, with a gross profit of $1,812 million[164] Expenses and Cost Management - Direct Net Sales decreased by $22 million, or 7.0%, primarily due to a decline in fulfilled orders[110] - General, Administrative and Store Operating Expenses increased to $497 million, up $15 million, with a rate of 31.2%, compared to 30.0% in Q3 2024[113] - Total General, Administrative and Store Operating Expenses were $1.418 billion for year-to-date 2025, an increase of $73 million, with an expense rate of 31.0%[124] - The company plans to deliver $250 million in cost savings over the next two years to invest in revenue-generating initiatives[103] Cash Flow and Capital Expenditures - Net cash provided by operating activities for year-to-date 2025 was $225 million, including net income of $246 million[134] - Capital expenditures for year-to-date 2025 were $174 million, with plans for approximately $240 million in capital expenditures for 2025 focused on real estate and technology[136][138] - Cash and cash equivalents at the end of year-to-date 2025 were $236 million, down from $674 million at the beginning of the year[133] Debt and Interest - Average daily borrowings for Q3 2025 were $3.916 billion, with an average borrowing rate of 7.0%[115] - Interest Expense for year-to-date 2025 was $208 million, a decrease from $236 million in year-to-date 2024, due to lower average daily borrowings and borrowing rates[127] - Cash paid for interest in year-to-date 2025 was $181 million, down from $217 million in the same period of 2024[147] - As of November 1, 2025, total long-term debt was $3,890 million, a slight decrease from $3,884 million in February 2025[147] - The principal value of outstanding debt as of November 1, 2025, is $3,916 million, with an estimated fair value of $4,037 million[180] Shareholder Returns - The company repurchased 11.450 million shares for $343 million during year-to-date 2025[131] - Total dividends paid in 2025 amounted to $126 million, with a per share dividend of $0.60, consistent with 2024's total of $134 million[145] Risk Management - The company’s Canadian dollar earnings are subject to foreign exchange rate risk due to sourcing merchandise through U.S. dollar transactions[175] - Royalties from international partners are calculated based on local currency sales, exposing the company to foreign currency exchange rate fluctuations[176] - The company actively monitors credit risk by limiting exposure to any single financial institution and reviewing the credit standing of partners[179] Corporate Strategy - The transformation plan, "The Consumer First Formula," focuses on attracting new, younger customers and creating innovative products[98] Ratings and Facilities - The corporate credit rating from Moody's is Ba2 and from S&P is BB+, both with a stable outlook as of November 1, 2025[157] - The ABL Facility was amended in May 2025, extending the expiration date to May 2030 and removing a 0.10% interest rate credit spread adjustment[152] - The company had $741 million available under the Asset-backed Revolving Credit Facility as of November 1, 2025, after accounting for $9 million in outstanding letters of credit[154] Asset Management - The investment portfolio primarily consists of interest-bearing instruments, including U.S. government obligations and AAA-rated money market funds, with a focus on preserving principal and maximizing interest income[177] - All outstanding long-term debt as of November 1, 2025, has fixed interest rates, limiting exposure to interest rate changes[178] - The carrying values of Accounts Receivable, Accounts Payable, and Accrued Expenses approximate their fair values due to short maturities as of November 1, 2025[181] - The company had contingent obligations of $220 million related to lease payments as of November 1, 2025[165]