Bath & Body Works Projects Lower Sales, Citing Tariffs and Spending Slump

THE WHAT? Bath & Body Works has issued a subdued outlook for fiscal 2025, projecting net sales growth of just 1 percent to 3 percent, below consensus estimates. The retailer attributed its conservative forecast to the effects of new US tariffs on Chinese imports and weakened consumer appetite for fragrances and scented candles.

THE DETAILS 

• Fiscal 2025 net sales are guided at 1 percent to 3 percent growth, against analysts’ forecast of 2.8 percent.
• Expected full-year earnings per share range from $3.25 to $3.60, missing the $3.62 consensus.
• The guidance factors in the direct impact of recently enacted tariffs, though additional levy changes remain uncertain.
• Despite the cautionary outlook, Bath & Body Works surpassed holiday-quarter expectations, reporting adjusted earnings of $2.09 per share (versus a $2.05 estimate) and quarterly sales of $2.79 billion (topping the $2.78 billion forecast).
• The company also announced a new share repurchase program worth up to $500 million.
• Persistent inflation, higher interest rates and economic volatility have led US consumers to scale back spending and increasingly opt for private-label products.

THE WHY? Heightened operational costs due to tariffs and tightening consumer spending are applying pressure to Bath & Body Works’ core business in personal care and home fragrance. While promotions and targeted marketing have momentarily boosted sales, the company remains cautious amid ongoing economic headwinds and shifting shopper preferences.

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