Bath & Body Works, Inc. Q4 FY2025 earnings call

Daniel Heaf discussed the fourth quarter results, outlook for fiscal 2026, and progress on the Consumer First Formula. Progress across four strategic priorities: creating disruptive and innovative products (e.g., new moisturizing hand soap, Disney Princesses collaboration), reigniting the brand (modernizing brand identity, using influencers), winning in the marketplace (simplifying in-store experience, launching on Amazon), and operating with speed and efficiency (Fuel for Growth program targeting $250 million in cost savings). Eva C. Boratto provided financial details, including fourth quarter and fiscal 2025 results, 2026 guidance (net sales down 4.5% to down 2.5%, gross profit rate ~42.4%, adjusted SG&A rate ~29.2%, adjusted earnings per diluted share $2.40 to $2.65), first quarter outlook, and capital allocation plans.

Fourth quarter net sales were $2.7 billion, down 2.3% versus last year. Body care declined mid-single digits, home fragrance grew low single digits, soaps and sanitizers grew low single digits. U.S. and Canadian stores net sales decreased 2.6%, direct channel net sales decreased 2.5%, international net sales were $91 million, up 8.6%. Adjusted gross profit rate was 45.7%, adjusted SG&A rate was 23.2%, adjusted operating income was $614 million, 22.5% of net sales. Adjusted earnings per diluted share was $2.05. Fiscal 2025 net sales were $7.3 billion, flat to prior year, adjusted earnings per share was $3.21.

Expect 2026 net sales to be down 4.5% to down 2.5%, international net sales up mid- to high single digits. Full-year gross profit rate ~42.4%, adjusted SG&A rate ~29.2%, adjusted earnings per diluted share $2.40 to $2.65. First quarter net sales expected to be down 6% to down 4%, first quarter adjusted earnings per diluted share $0.24 to $0.30. 2026 capital expenditures ~$270 million, expect to generate ~$600 million of free cash flow.

Q: Lorraine Hutchinson asked about competitive landscape and positioning.

A: Daniel Heaf responded on product innovation, brand expression, distribution, and use of content creators.

Q: Ike Boruchow asked about Q1 revenue guide and Disney Princess launch.

A: Eva C. Boratto discussed Q1 trends and Disney launch performance.

Q: Matthew Boss asked about signposts for Consumer First Formula working.

A: Daniel Heaf and Eva C. Boratto talked about new-to-brand growth, pricing power, hero category performance, and Amazon.

Q: Mark Altschwager asked about margin and top line vs margin.

A: Eva C. Boratto and Daniel Heaf discussed margin durability and growth strategy.

Q: Simeon Siegel asked about Amazon, wholesale, and leverage.

A: Daniel Heaf and Eva C. Boratto talked about Amazon, wholesale strategy, and leverage points.

Q: Kate McShane asked about pricing and benefit-led claims.

A: Daniel Heaf discussed pricing strategy and benefit-led claims.

Q: Krisztina Katai asked about new customer acquisition and social media.

A: Daniel Heaf talked about new consumer expectations and social media engagement