Bath & Body Works has reported a decline in sales for the fourth quarter, but an analyst said the results were a “respectable uplift” considering several factors.
The company’s net sales for the quarter ended February 1 fell 4.3 per cent to $2.788 billion. The decline was due to this quarter having 13 trading weeks compared to 14 weeks in the prior-year period.
Excluding this headwind, sales were up approximately 0.7 per cent.
According to GlobalData MD Neil Saunders, this is a respectable level of uplift that has been delivered off the back of growth last year.
“It is reasonable to say that Bath & Body Works continues to move onto positive ground and that its initiatives are bearing fruit,” he added.
For the full year, net sales slid 1.6 per cent to $7.429 billion, including a headwind of approximately 100 basis points due to the shift in fiscal calendar.
Stores in the US and Canada recorded a 0.5 per cent sales growth, despite this fiscal having one fewer week. Saunders attributed this to the “extensive effort” the company puts into its stores in terms of products and customer service, as well as the increased excitement in the range.
Meanwhile, online sales dropped 6.8 per cent for the year. The analyst believes the company is still resetting from a surge in online sales during the pandemic and its aftermath. Compared to the fiscal year of 2019, online sales are up by 53.8 per cent.
Another factor that hurt online sales is the more intense competition, particularly for home fragrance and candles, he added.
Saunders also highlighted Bath & Body Works’ focus on innovation, which was effective amid a more challenging market and consumer demand. The company has “doubled down on thoughtful newness and inspiration”, he elaborated, including more collaborations across beauty and fragrance and quick response to trends.
The brand also stepped into new categories to enlarge its share of wallet and find new avenues for growth, Saunders continued, adding that there is headroom for both further growth from the newly launched lines.
For FY25, the company expects net sales to grow 1-3 per cent, which the analyst considered a solid outlook.
“This represents a step up on the choppier performance over the past couple of years. Given the uncertain consumer environment, we see this as a good outcome and one that reflects the underlying work to strengthen the business,” Saunders concluded.
