Why Bath & Body Works Stock Cratered Today

Core Insights - Bath & Body Works shares fell by as much as 25.7% following disappointing third-quarter results and a reduced full-year outlook [1] - The company introduced a transformation plan aimed at revitalizing growth in its fragrance and personal-care segments [1] Financial Performance - In Q3 2025, net sales were $1.59 billion, a decrease of 1% year-over-year, while adjusted earnings per share dropped to $0.35 from $0.49, missing both management and consensus expectations [3] - This performance contrasts with Q2 2025, where net sales grew by 1.5% year-over-year and adjusted earnings per share remained flat [3] Management Commentary - Management attributed the weaker performance to reduced discretionary spending and increased promotional activities, which negatively impacted demand and profitability [4] - CEO Daniel Heaf acknowledged the below-expectation performance and ongoing macroeconomic pressures affecting core shoppers [4] Revised Guidance - The revised forecast indicates a shift from an expected full-year 2025 net sales growth of 1.5% to 2.7% to a low single-digit decline [5] - Adjusted earnings per share is now projected to be at least $2.87, down from a previous range of $3.35 to $3.60, and below last year's figure of $3.29 [5] Valuation and Market Reaction - Following the stock's decline, it now trades at less than six times the low end of the adjusted earnings outlook, representing a modest valuation for a cash-generating retailer [6] - The new turnaround plan will require time to demonstrate effectiveness, and the guidance cut indicates challenging near-term trends [6]