Bath & Body Works, Inc. Q4 FY2026 earnings call

Daniel Heaf discussed the fourth quarter performance, which was better than anticipated but below standards. The Consumer First Formula was introduced as a multiyear plan to return to growth. Progress across four strategic priorities: creating disruptive and innovative products, including new moisturizing hand soap and 2026 product pipeline; reigniting the brand with modern brand and marketing storytelling; winning in the marketplace by simplifying in-store experience, launching on Amazon, and expanding international business; operating with speed and efficiency through Fuel for Growth program targeting $250 million in cost savings over 2 years

Fourth quarter net sales were $2.7 billion, down 2.3% vs 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, adjusted EPS was $2.05. Fiscal 2025 net sales were $7.3 billion, flat to prior year; adjusted earnings per share was $3.21, down 2%

2026 net sales expected to be down 4.5% to down 2.5%; international net sales expected up mid- to high single digits. Full year gross profit rate expected ~42.4%, adjusted SG&A rate ~29.2%, adjusted earnings per diluted share forecast $2.40 to $2.65. Q1 2026 net sales expected down 6% to down 4%, adjusted earnings per diluted share forecast $0.24 to $0.30. 2026 capital expenditures expected ~$270 million, free cash flow expected ~$600 million, maintain annual dividend of $0.80 per share, redeem $284 million of January 2027 notes in Q1

Q: Insight on competitive landscape and how positioned to compete; A: Consumer First Formula addressing gaps, bold product innovation, expanded content creator use, elevated distribution.

Q: Gross margin forecast puts and takes; A: ~130 basis points of gross margin pressure, merch margin pressure from product investments, tariffs roughly flat, B&O pressure.

Q: 1Q revenue guide and Disney Princess launch impact; A: Core business trending down ~3%, Q1 facing tough comps, Disney launch in line with expectations.

Q: Signposts for Consumer First Formula working; A: Acceleration in new-to-brand customer growth, stronger pricing power, improved hero category performance, expanded distribution.

Q: Quantify Amazon initial reads and wholesale partnerships; A: Early to assess Amazon performance, ~$50 million or 0.5 point growth from expanded distribution, wholesale model for Amazon.

Q: Initiatives around luxury and pricing power; A: Expect AUR improvements on innovative products, not relying on deep discounts.

Q: New customer acquisition and social media engagement; A: Expect trend break in new consumers, focus on 25-30 year old female demographic, track influencer posts