Core Insights - Bath & Body Works (BBWI) reported fourth-quarter fiscal 2025 results with both top and bottom lines exceeding Zacks Consensus Estimates, although they showed a year-over-year decline due to soft consumer demand and macroeconomic challenges [1][3][9] Financial Performance - Adjusted earnings were $2.05 per share, surpassing the Zacks Consensus Estimate of $1.77, but down 1.9% from $2.09 in the previous year [3] - Net sales decreased by 2.3% year over year to $2,724 million, exceeding the consensus estimate of $2,613 million [3] - U.S. and Canada store net sales fell 2.6% to $2.05 billion, beating the estimate of $2.02 billion, while direct sales dropped 2.5% to $579 million, surpassing the estimate of $534.3 million [4] - International net sales increased by 8.6% to $91 million, exceeding the estimate of $88.6 million [4] Margins and Expenses - Gross profit declined by 4.4% year over year to $1.24 billion, with gross margin contracting by 100 basis points to 45.7% [5] - General, administrative, and store operating expenses rose by 3.5% to $645 million, with the percentage of net sales increasing by 130 basis points to 23.7% [6] - Operating income was $599 million, down 11.7% from $678 million, with operating margin decreasing by 230 basis points to 22% [6] Store Operations - The company operated 1,927 stores at the end of the quarter, including 1,814 in the U.S. and 113 in Canada, having opened 94 and closed 62 stores during fiscal 2025 [8] - Internationally, partners operated 573 stores, with 74 openings and 30 closures during the year [8] Future Guidance - For fiscal 2026, BBWI expects net sales to decline between 4.5% and 2.5%, based on a similar macro environment to 2025 [15] - The company anticipates a gross profit rate of 42.4% for the full year, reflecting B&O deleverage and merchandise margin pressure [17] - Fiscal first-quarter EPS is projected between 84 cents and 90 cents, compared to 49 cents in the prior year [13] - The company plans to invest $270 million in capital expenditures focused on high-return real estate and Consumer First Formula initiatives [21] Cash Flow and Shareholder Returns - BBWI generated $1.10 billion in net cash from operating activities and returned $167 million to shareholders through dividends, along with repurchasing 15.1 million shares for $400 million [11] - The company expects to generate approximately $600 million in free cash flow in fiscal 2026 [21]

Core Insights - Bath & Body Works reported strong fourth-quarter sales, with adjusted earnings per share (EPS) of $2.05 and quarterly sales of $2.724 billion, which is a 2% decline year over year but exceeds analysts' expectations of $1.336 billion [1] Group 1: Financial Performance - The company expects fiscal 2026 adjusted EPS to be between $2.40 and $2.65, which is below analysts' estimate of $2.80 [2] - Bath & Body Works forecasts GAAP EPS for fiscal 2026 to be between $3.00 and $3.25, compared to the previous estimate of $3.05, with sales projected between $6.963 billion and $7.109 billion, lower than the expected $7.220 billion [2] - For the first quarter, the company anticipates GAAP EPS of 84 cents to 90 cents, exceeding analysts' estimate of 29 cents, and adjusted EPS of 24 cents to 30 cents, compared to the expected 20 cents [3] Group 2: Market Reaction and Analyst Opinions - Following the earnings announcement, Bath & Body Works shares fell by 1.8% to $22.60 [3] - Telsey Advisory Group analyst Dana Telsey maintained a Market Perform rating and raised the price target from $23 to $25 [4] - Barclays analyst Adrienne Yih maintained an Equal-Weight rating and also raised the price target from $21 to $25 [4]

Core Insights - Bath & Body Works reported better-than-expected fourth quarter results, driven by targeted holiday actions that offset a slow start to the period [4] - The company is undergoing a multi-year turnaround plan, the full financial impact of which is expected to materialize gradually through 2026 and accelerate into 2027 [8] Financial Performance - Fourth quarter net sales were $2.7 billion, down 2.3% year over year, but above the company's guidance of a high single-digit decline [2] - Adjusted earnings per diluted share were $2.05, down 2% year over year, exceeding expectations [2] - For fiscal 2025, net sales were reported at $7.3 billion, flat year over year, with adjusted EPS of $3.21, down 2% [15] - Fiscal 2026 guidance anticipates a net sales decline of 4.5% to 2.5% and adjusted EPS between $2.40 to $2.65 [16][17] Product and Innovation - The company is focusing on a "Consumer First Formula" strategy, emphasizing disruptive product innovation and brand revitalization [8] - A new moisturizing hand soap with an updated formula and elevated packaging has shown strong consumer demand, with productivity double that of the product it replaces [8][9] - The 2026 product pipeline will include a restage of moisturizing body wash and a new hand sanitizer, with an emphasis on ingredient transparency [9] Market Expansion and Digital Strategy - Bath & Body Works launched on Amazon, providing access to a broad customer base and expected to contribute approximately $50 million to growth [12][13] - The company is modernizing its marketing approach, increasing investment in upper-funnel media and leveraging content creators for improved social media presence [11] Operational Metrics - Fourth quarter adjusted gross profit rate was 45.7%, down 100 basis points year over year, primarily due to tariff impacts [5] - Adjusted SG&A rate was 23.2%, up 90 basis points year over year, reflecting softer sales and investments in technology [6] - Inventory levels decreased by 5% year over year, with a focus on maintaining clean inventory heading into spring [7] Capital Allocation and Future Outlook - For fiscal 2026, capital expenditures are expected to be approximately $270 million, with free cash flow projected at around $600 million [21] - The company plans to maintain its annual dividend of $0.80 per share while pausing share repurchases [21] - Management is monitoring indicators of growth, including new customer acquisition and improved pricing power linked to innovation [22]

Core Insights - Bath & Body Works, Inc. reported a solid profit beat with adjusted earnings per share of $2.05 for the fourth quarter, despite a 2% year-over-year decline in quarterly sales to $2.724 billion, which exceeded analysts' expectations of $1.336 billion [1] Segment Performance - Quarterly gross profit was $1.244 billion, down from $1.301 billion a year ago, while operating income decreased to $599 million from $678 million [2] Strategic Initiatives - The CEO highlighted the urgency in accelerating innovation, refreshing the brand, expanding distribution, and simplifying operations since the launch of the Consumer First Formula. Notable actions include an earlier-than-planned launch on Amazon and the rollout of a new brand identity [3] Full-Year Results - For the fiscal year ending January 31, 2026, net sales were reported at $7.291 billion, a slight decrease of 0.2% from $7.307 billion in the previous year. Earnings per diluted share fell to $3.11 from $3.61 in 2024 [4] Outlook - The company expects fiscal 2026 adjusted EPS to be between $2.40 and $2.65, below the analysts' estimate of $2.80. GAAP EPS is forecasted to be between $3.00 and $3.25, with sales projected between $6.963 billion and $7.109 billion, also below expectations [5] First-Quarter Forecast - For the first quarter, Bath & Body Works anticipates GAAP EPS of 84 to 90 cents, exceeding analysts' estimate of 29 cents, and adjusted EPS of 24 to 30 cents compared to 20 cents. However, first-quarter sales are expected to be between $1.339 billion and $1.367 billion, below the Street view of $1.476 billion [6] Sales Breakdown - Sales in the U.S. and Canada declined by 2.6% year over year to $2.05 billion, while direct sales fell by 2.5% to $579 million. Conversely, international sales increased by 8.6% year over year to $91 million [6]

Financial Data and Key Metrics Changes - The company reported net sales of $2.7 billion for Q4 2025, down 2.3% year-over-year, but better than the guidance of a high single-digit decline [20] - Adjusted EPS for the quarter was $2.05, exceeding expectations and down 2% from the previous year [24] - For the fiscal year 2025, net sales were flat at $7.3 billion, with adjusted EPS of $3.21, also down 2% year-over-year [25] Business Line Data and Key Metrics Changes - Body Care sales declined mid-single digits, impacted by underperformance in seasonal collections [22] - Home Fragrance grew low single digits, with candles performing well due to better inventory positioning [22] - Soaps & Sanitizers also saw low single-digit growth, led by PocketBac sanitizers [22] Market Data and Key Metrics Changes - U.S. and Canadian store net sales were $2.1 billion, a decrease of 2.6% compared to the prior year [22] - Direct channel net sales were $579 million, down 2.5%, while international net sales increased by 8.6% to $91 million [23] - System-wide retail sales grew by 13%, indicating a rebound in the international business [23] Company Strategy and Development Direction - The company is implementing the "Consumer First Formula," a multi-year plan aimed at returning to sustainable growth [5][6] - Focus areas include product innovation, brand modernization, and enhancing the in-store experience [12][15] - The company aims to transition from a specialty retailer to a global brand, leveraging its extensive store network and improving digital presence [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the competitive landscape and emphasized the need for disruptive product innovation and effective marketing [34][35] - The company expects to see improvements in financial performance as the Consumer First Formula is executed throughout 2026 and into 2027 [6][19] - Management is optimistic about the international market, with plans for new store openings and a strong demand for the brand [17][55] Other Important Information - The company is targeting $250 million in cost savings over two years through its Fuel for Growth program, with $175 million expected in 2026 [18][27] - The company plans to reduce the number of new store openings, resulting in approximately 1% square footage growth [31] - The company is committed to maintaining its annual dividend of $0.80 per share while focusing on strategic investments [31] Q&A Session Summary Question: Insights on the competitive landscape - Management acknowledged the increasing competition and emphasized the need for bold product innovation and effective marketing strategies [34][35] Question: Gross margin forecast - Management expects about 130 basis points of gross margin pressure due to product investments and tariffs, with a focus on improving underlying costs [39][41] Question: Q1 revenue guidance - Management indicated that the core business has been trending down about 3%, with promotional levels expected to remain consistent with 2025 [45] Question: Initial reads from Amazon - Management noted that it is early to assess performance but emphasized the importance of Amazon in extending brand reach and driving discovery [60][61] Question: Pricing strategy - Management stated that the strategy is to regain pricing power through innovative products and a refreshed brand identity, moving away from frequent discounts [90]

Financial Data and Key Metrics Changes - The company reported net sales of $2.7 billion for Q4 2025, down 2.3% year-over-year, but better than the guidance of a high single-digit decline [20] - Adjusted EPS for the quarter was $2.05, exceeding expectations and down 2% from the previous year [24] - For the fiscal year 2025, net sales were flat at $7.3 billion, with adjusted EPS of $3.21, also down 2% year-over-year [25] Business Line Data and Key Metrics Changes - Body care sales declined mid-single digits, impacted by underperformance in seasonal collections [22] - Home fragrance grew low single digits, with candles performing well due to better inventory positioning [22] - Soaps and sanitizers also saw low single-digit growth, led by pocket bag sanitizers [22] Market Data and Key Metrics Changes - U.S. and Canadian store net sales were $2.1 billion, a decrease of 2.6% compared to the prior year [22] - Direct channel net sales were $579 million, down 2.5%, while international net sales increased by 8.6% to $91 million [23] - System-wide retail sales grew by 13%, indicating a rebound in the international business [23] Company Strategy and Development Direction - The company introduced the "Consumer First Formula," a multi-year plan aimed at returning to sustainable growth [5] - Focus on product innovation, modernizing brand communication, and enhancing the in-store experience [12][15] - Plans to leverage collaborations and expand distribution channels, including a recent launch on Amazon [11][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the competitive landscape and emphasized the need for disruptive product innovation and effective market execution [34][35] - The company expects to see improvements in financial performance as the Consumer First Formula is executed throughout 2026 and into 2027 [6][19] - Management is optimistic about the potential for growth in international markets and the impact of new distribution channels [17][51] Other Important Information - The company is targeting $250 million in cost savings over two years through the Fuel for Growth program, with $175 million expected in 2026 [18][27] - Inventory levels were down 5% year-over-year, indicating a clean inventory position heading into spring [24] - The company plans to invest approximately $270 million in capital expenditures in 2026, focusing on high-return real estate and Consumer First Formula initiatives [31] Q&A Session Summary Question: Insights on the competitive landscape - Management acknowledged the increasing competition and emphasized the need for bold product innovation and a refreshed brand to compete effectively [34][35] Question: Gross margin forecast - Management expects about 130 basis points of gross margin pressure due to product investments and tariffs, with a focus on improving underlying costs [39][41] Question: Q1 revenue guidance - Management indicated that the core business has been trending down about 3%, with promotional levels expected to remain consistent with 2025 [44] Question: Initial reads from Amazon - Management noted that it is early to assess performance on Amazon but is optimistic about the channel's potential to extend reach and drive brand discovery [59][61] Question: Pricing strategy - Management stated that the strategy is to regain pricing power through innovative products and a strong brand identity, moving away from frequent discounts [89]

Financial Data and Key Metrics Changes - For Q4 2025, net sales were $2.7 billion, down 2.3% year-over-year, but better than the guidance of a high single-digit decline [19] - Adjusted EPS was $2.05, exceeding expectations and down 2% from the previous year [23] - The adjusted gross profit rate was 45.7%, a decline of 100 basis points from last year, primarily due to tariff impacts [22] - Adjusted SG&A rate increased to 23.2%, reflecting investment in technology and initiatives related to the Consumer First Formula [23] - For the fiscal year 2025, net sales were $7.3 billion, flat compared to the prior year, with adjusted EPS at $3.21, down 2% [24] Business Line Data and Key Metrics Changes - Body care sales declined mid-single digits, driven by underperformance in seasonal collections [20] - Home fragrance grew low single digits, with candles performing well due to better inventory positioning [20] - Soaps and sanitizers also grew low single digits, led by pocket bag sanitizers [20] - Direct channel net sales were $579 million, down 2.5%, while international net sales were $91 million, up 8.6% [21] Market Data and Key Metrics Changes - U.S. and Canadian store net sales were $2.1 billion, a decrease of 2.6% year-over-year [20] - System-wide retail sales grew 13%, indicating a rebound in the international business with all geographies delivering growth [21] Company Strategy and Development Direction - The company introduced the Consumer First Formula, a multi-year plan aimed at returning to sustainable growth [4] - Focus on creating innovative products and modernizing brand communication to attract younger consumers [11][12] - Plans to simplify and modernize the in-store experience, reducing SKUs by 10% [13] - Expansion into new markets, with international business approaching $1 billion in retail sales [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant macroeconomic pressures impacting consumer demand but noted improvements as the quarter progressed [19] - The company expects 2026 to be a year of disciplined investment, with net sales projected to decline between 4.5% and 2.5% [24][25] - Management is confident in the strategy and the ability to establish Bath & Body Works as a premier global brand [31] Other Important Information - The company is targeting $250 million in cost savings over two years through the Fuel for Growth program [17] - The launch of the Amazon partnership is expected to enhance brand discovery and reach new consumers [15][60] Q&A Session Summary Question: Insights on the competitive landscape - Management acknowledged the increasing competition and emphasized the need for bold product innovation and a refreshed brand to compete effectively [33][34] Question: Gross margin forecast - Management expects about 130 basis points of gross margin pressure due to product investments and tariffs [38][39] Question: Q1 revenue guidance - Management indicated that the core business has been trending down about 3% and expects promotional levels to remain consistent with 2025 [42][43] Question: Initial reads from Amazon - Management noted that it is early to assess performance but is optimistic about the brand's elevated positioning on Amazon [57][60] Question: Pricing strategy - Management stated that the focus is on regaining pricing power through innovative products without relying on deep discounts [86][87]

Core Insights - The company is transitioning from a promotion-reliant specialty retailer to a premier global brand focused on luxury scent and product efficacy [1] - Fourth quarter performance exceeded expectations due to a consumer rebound following government reopening and successful holiday promotions [1] - The company is addressing stagnation in product innovation and brand expression to appeal to younger consumers and compete with agile competitors [1] Performance Summary - A strategic SKU reduction of 10% was implemented to simplify the in-store experience and modernize the shopping journey [1] - Q4 performance attribution showed home fragrance and soaps growing low-single digits, while body care declined mid-digits due to seasonal collections that did not resonate [1] Strategic Initiatives - The 'Fuel for Growth' program aims for $250 million in cost savings over two years to reinvest in brand marketing and product innovation [1] - International expansion is a core pillar, with system-wide retail sales nearing $1 billion and partners accelerating store openings in markets like Germany and Brazil [1]

Q4 and Full Year 2025 Earnings & 2026 Guidance March 4, 2026 Q4 Earnings Call Participants Daniel Heaf Chief Executive Officer Eva Boratto Chief Financial Officer Luke Long VP Strategy & Investor Relations 2 Forward-looking Statements Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this presentation or made by our Company or our manage ...

Core Insights - Bath & Body Works, Inc. reported fourth quarter and full-year 2025 results, indicating a decrease in net sales and earnings compared to the previous year [1][3][5]. Fourth Quarter 2025 Results - The company reported net sales of $2,724 million for the fourth quarter, a decrease of 2% from $2,788 million in the same quarter of the previous year [3][10]. - Earnings per diluted share were $1.99, down from $2.09 in the prior year [3][10]. - Operating income for the fourth quarter was $599 million, compared to $678 million last year [3][10]. - Net income decreased to $403 million from $453 million in the previous year [3][10]. - Adjusted earnings per diluted share were $2.05, with adjusted operating income at $614 million and adjusted net income at $415 million [4][10]. Full-Year 2025 Results - For the full year, net sales were $7,291 million, a slight decrease of 0.2% from $7,307 million in 2024 [5][6]. - Earnings per diluted share for the year were $3.11, down from $3.61 in 2024 [6][9]. - Full-year operating income was $1,126 million, compared to $1,266 million last year [6][9]. - Net income for the year was $649 million, down from $798 million in the previous year [6][9]. - The company repurchased 15.1 million shares for $400 million during the fiscal year [6]. Business Transformation and Future Guidance - The CEO emphasized the ongoing transformation of the business, aiming to reposition Bath & Body Works as a premier global brand [2]. - For fiscal 2026, the company forecasts a decline in net sales between 4.5% to 2.5% compared to 2025, with earnings per diluted share expected to be between $3.00 and $3.25 [10][12]. - The company anticipates generating approximately $600 million in free cash flow for fiscal 2026 [12][49]. Store Operations - As of January 31, 2026, the total number of company-operated stores increased to 1,927, with 94 new openings and 62 closures [35][36]. - The total number of partner-operated stores internationally rose to 573, with 74 new openings and 30 closures [36].