Bath & Body Works saw its sales decrease in the fourth quarter despite the busy holiday shopping season.
The company’s net sales slid 2.3 per cent to $2.7 billion during the quarter ended January 31.
GlobalData MD Neil Saunders said the latest drop, which was driven by declines across both stores and online, cemented the fact that the company has struggled to generate meaningful growth over recent years.
“While these are not catastrophic dips, they are disappointing during the critical holiday quarter when both home scent and body care are categories that are high on the purchasing agenda,” he continued.
According to the analyst, the reason for the softness is twofold.
“First, during the pandemic period, Bath & Body Works experienced huge sales growth – a rise of 47.1 per cent between 2019 and 2021. As the already dominant player in categories like candles and shower gels, it effectively pushed penetration closer to its natural ceiling.
“The second issue is with competition. Bath & Body Works remains popular, but its customers are shopping around more and the volume they buy from rivals has increased. In 2022, 48.7 per cent of Bath & Body Works’ candle buyers cross-shopped with other retailers. In 2025, that figure had climbed to 61.4 per cent. The same kind of dynamic applies to body care categories,” Saunders explained.
Management has tried to address the problems, including the move to sell through Amazon. Saunders said while there is the risk of cannibalizing sales from the direct channels, there is more to gain than to lose.
The other side of the solution is to be more innovative, especially in personal care categories. Saunders believes the focus needs to shift into more scientific innovation in terms of product efficacy, clean formulations, and solving skincare and wellness needs.
On the bottom line, fourth-quarter net income decreased 11 per cent to $403 million.
For the full year, net sales were down 0.2 per cent to $7.29 billion, and net income dropped 18.6 per cent to $649 million. The company expects net sales to decline 2.5-4.5 per cent in FY26.
Saunders said the soft outlook reflects that transformation works will take time to materialize.
“The moves being made are essential as competition is intensifying as more players crowd into the space and retailers like Target look to significantly invest in their home and beauty offerings,” he added.
