March 4 (Reuters) – Bath & Body Works on Wednesday forecast a steeper-than-expected decline in annual sales, despite beating holiday-quarter estimates, as CEO Daniel Heaf said a turnaround at the fragrance retailer will take time.
Shares of the company, which lost nearly half of their value last year, were up about 4% in early trading.
Consumers struggling to make ends meet owing to concerns around rising costs-of-living and weak labor market have cut back spending on expensive non-essentials, in turn hurting sales at companies such as Bath & Body Works.
The Ohio-based company expects full-year net sales to decline in the range of 2.5% to 4.5%, compared with analysts’ estimates of 1.9% fall, according to data compiled by LSEG.
The midpoint of its annual adjusted profit forecast range $2.40 to $2.65 per share, came in slightly below estimates of $2.56.
Bath & Body Works, which sources its products domestically, said its full-year outlook assumes about 130 basis points of gross margin pressure from tariff-related product cost inflation.
“We expect continued topline and operating margin pressure in 2026 as management continues to reset the business,” said Dana Telsey, analyst at Telsey Advisory Group.
Under Heaf’s transformation plan, Bath & Body Works is working on boosting loyalty, elevating its digital platform, reviving its brands, and expanding its reach by selling on Amazon in the U.S.
“We are making progress, but transformations of this scale take time. We are undertaking a comprehensive, end-to-end evolution of our business,” Heaf said.
The company said on Wednesday it has reduced its product offerings by 10% to simplify and modernize the in-store experience. Last year, it said it would drop non-core categories to refocus on key businesses.
Bath & Body Works posted fourth-quarter sales of $2.72 billion, beating estimates of $2.62 billion.
It logged a quarterly adjusted profit of $2.05 per share, above estimates of $1.77 per share.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Krishna Chandra Eluri)
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