By Suzanne Kapner

Shoppers come to Bath & Body Works for its soothing body butters, scented candles and decorative soaps and hand sanitizers. Shampoo and laundry detergent? Not so much.

As the company veered into new categories in recent years, sales of its core products suffered. Its shares have plunged more than 45% this year.

On Thursday, the Columbus, Ohio, retailer reported a drop in sales and earnings and slashed its forecast for the year.

A difficult economic environment, in which penny-pinching consumers are less likely to splurge on gifts for themselves, didn't help. But the real culprit, according to Chief Executive Daniel Heaf, was a strategy pursued by former management that neglected its most-popular categories in pursuit of new avenues of growth. The growth didn't materialize as expected, and the core, namely body care, home fragrances, soaps and sanitizers, suffered.

As a result, the company started using discounts to drive sales, said Heaf, a former Nike and Burberry executive, who joined Bath & Body Works in May. Discounts, he said, weaken the business further by destroying price integrity and brand loyalty.

Heaf added that the expansion into new categories had been a distraction. "Adjacencies are never quite as adjacent as people think they are," he said. "Laundry is a very different market with different dynamics."

Along with its quarterly results, Heaf unveiled a plan to fix the problems but warned the company's annual sales were unlikely to return to growth until 2027.

Bath & Body Works will be exiting some of those new categories such as hair care and men's grooming. Instead, it will focus on developing new and better offerings in its staple categories.

It will start selling in new places such as Amazon.com and clamp down on bulk resellers. Heaf estimates that $60 million to $80 million of Bath & Body Works products are sold on Amazon annually through unauthorized resellers.

Bath & Body Works also plans to overhaul its website. Digital sales account for about a fifth of its annual revenue, well below competitors, Heaf said. Its website had been viewed as a place where shoppers could replenish items they bought in stores. As such, not all items had photos or detailed descriptions. Its checkout process is cumbersome. And collections aren't grouped together.

"If you go to Japanese Cherry Blossom on our website, you would not know that it comes as a candle, body lotion, body butter and body wash because we don't put it together in an easy-to-navigate way for our consumers," Heaf said.

To pay for some of these investments, the company plans to cut $250 million in costs, with half of that coming next year. Heaf said the cuts would be in sourcing, inventory and through the use of automation. He declined to say how many jobs would be affected.

Heaf said weakening consumer sentiment has been a headwind. "We have had a very tough start to the holiday," he said.

Net sales fell 1% to $1.59 billion for the period that ended Nov. 1.

Net income fell 27% to $77 million, or 37 cents a diluted share, from $106 million, or 49 cents a share, a year earlier.

The company expects sales for its year-end quarter to decline in the high-single-digit percentage range. It expects earnings of at least $1.70 a share, down from $2.09 a share last year.

For the full year, sales are expected to decline in the low-single-digit percentage range, compared with a previous estimate of gains of up to 2.7%.

One positive aspect is that work Bath & Body Works did several years ago to move its supply chain back to the U.S. allows it to be more nimble by restocking products within weeks. "But as a company, we've just become slow and siloed," Heaf said.

Executives have become too focused on back-end investments such as a new point-of-sale system rather than investments that would more fully affect the shopping experience, he said.

Write to Suzanne Kapner at suzanne.kapner@wsj.com

(END) Dow Jones Newswires

November 20, 2025 07:00 ET (12:00 GMT)

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