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Bath & Body Works, Inc. (BBWI)·Q3 2025 Earnings Summary

Executive Summary

  • BBWI delivered Q3 FY2025 (company-reported “third quarter 2024,” quarter ended Nov 2, 2024) revenue of $1.61B (+3.0% YoY) and EPS of $0.49, exceeding its top- and bottom-line guidance; operating margin was 13.5% and gross margin was 43.5% .
  • Strength came from product innovation, targeted promotions, and cost discipline; stores grew 4.4%, direct rose 1.5% and BOPIS demand grew ~40% (now ~25% of digital demand). International sales fell 11% due to Middle East pressures (≈70 bps headwind to growth) .
  • Management raised FY2024 guidance: net sales decline improved to -2.5% to -1.7% (vs -4% to -2% prior), EPS to $3.46–$3.59 and adjusted EPS to $3.15–$3.28; Q4 guide: revenue down 6.5% to 4.5% given 53rd-week comp and shorter holiday, EPS $1.94–$2.07, gross margin ~46.3%, SG&A ~22.4% .
  • S&P Global consensus estimates were unavailable at time of request; BBWI nevertheless beat its own Q3 guidance ($0.41–$0.47 EPS; revenue flat to +2.5%), aiding sentiment into holiday alongside raised FY guide and ongoing buybacks/dividends .

What Went Well and What Went Wrong

What Went Well

  • Broad-based category growth and traffic: Body care, home fragrance and soaps/sanitizers each grew low-single digits; store traffic exceeded external benchmarks, helped by seasonal storytelling and innovation .
  • Cost discipline and efficiency: Q3 gross margin of 43.5% (in line) with ~$35M Fuel for Growth savings; SG&A rate of 30% better than expected (timing shifts and home office controls). Full-year cost savings raised to $150M (two-year total $300M) .
  • Engagement flywheel: Active loyalty members ~38M (+4% YoY) representing >80% of sales; BOPIS demand +~40% and ~25% of digital demand, reinforcing omnichannel convenience and in-store attachment .

What Went Wrong

  • International softness: International revenue -11.1% YoY, with war-affected regions declining double-digits (partial October moderation). Net impact was ~70 bps headwind to Q3 sales growth .
  • Gross margin upside limited: Gross margin was flat to guidance (down ~10 bps YoY) as strategic promotions offset cost savings; merchandise margin flattish to LY .
  • Calendar dynamics complicate Q4: Management guided Q4 revenue down 6.5% to 4.5% due to a 53rd-week comp and five fewer shopping days, creating reported pressure despite normalized growth assumptions .

Financial Results

Headline Metrics vs. Prior Quarters (chronological: oldest → newest)

MetricQ3 2025 (ended Nov 2, 2024)Q1 2025 (ended May 3, 2025)Q2 2025 (ended Aug 2, 2025)
Revenue ($USD Millions)$1,610 $1,424 $1,549
EPS (Diluted, $)$0.49 $0.49 $0.30
Gross Margin %43.5% 43.8% 41.0%
Operating Margin %13.5% 13.5% 12.0%
Net Income ($USD Millions)$106 $105 $64
YoY Revenue Growth+3.0% +2.9% +1.5%

Notes:

  • Company beat its own Q3 guidance range on revenue and EPS (prior guide: revenue flat to +2.5% YoY; EPS $0.41–$0.47) .

Segment/Channel Breakdown – Q3 2025

SegmentRevenue ($USD Millions)YoY %
Stores – U.S. & Canada$1,220 +4.4%
Direct – U.S. & Canada$321 +1.5%
International (royalties & wholesale)$69 -11.1%
Total$1,610 +3.0%

KPIs and Operating Metrics – Q3 2025

KPIQ3 2025
Active loyalty members~38 million
Loyalty share of sales>80%
BOPIS demand growth YoY~+40%
BOPIS as % of digital demand~25%
Off‑mall store mix (North America)~55%
Inventory YoY~-2%
Fuel for Growth (Q3 benefit)≈$35M; FY2024 now $150M (two‑year total $300M)
International sales impact~70 bps headwind to Q3 sales growth
Store activity (Q3)Opened 35 new off‑mall; closed 19 in‑mall; +13 net partner stores

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (YoY)Q4 2024N/A-6.5% to -4.5% vs $2,912M prior-year; ~500 bps headwind from 53rd-week comp New
EPS (Diluted)Q4 2024N/A$1.94 – $2.07 New
Gross Margin %Q4 2024N/A~46.3% New
SG&A % of SalesQ4 2024N/A~22.4% New
Net non‑operating expenseQ4 2024N/A~$(70)M New
Tax rateQ4 2024N/A~26.4% New
Weighted avg diluted sharesQ4 2024N/A~217M New
Net Sales (YoY)FY 2024-4% to -2% -2.5% to -1.7% (53rd week is ~100 bps headwind) Raised (less negative)
EPS (Diluted)FY 2024$3.37 – $3.57 $3.46 – $3.59 Raised
Adjusted EPSFY 2024$3.06 – $3.26 $3.15 – $3.28 Raised
Free Cash Flow (Adjusted)FY 2024$675M – $775M (implied from prior commentary)$675M – $775M Maintained
Share repurchasesFY 2024$400M (raised from $300M in Aug) $400M Maintained
DividendOngoing$0.80 annual target cadence $0.20 quarterly declared Dec 6; expect $0.80/year ongoing Maintained

Earnings Call Themes & Trends (Q-2, Q-1 vs Current)

TopicQ-2 (Q2 2025)Q-1 (Q1 2025)Current (Q3 2025)Trend
Digital/social commerceAnnounced TikTok Shop rollout; native app upgrades; GenAI “Gingham Genius” planned for Q4 Tech/omnichannel foundations; roadmap on track Everyday Luxuries launched on TikTok Shop; continuing to leverage platform in holiday Improving
Supply chain & tariffsMargin benefits from sourcing/transport; fulfillment efficiencies B&O leverage requires 2–3% growth; off‑mall rents slightly lower 85% of products manufactured in North America; relatively well‑positioned vs tariff fluctuations Stable/positive
Macro/tariffsFY24 guide tempered for choppier macro; tariffs included in outlook Prudent guide; macro dynamic Q4 guide incorporates shorter holiday; still investing in brand Mixed
Category performanceSAS underperformed; home/body down L-SD Body care up L-SD; candles pressured; soaps near flat All three categories up L-SD; candles stabilized on unit basis; normalization moderating Improving
InternationalEx‑war regions grew DD; war regions pressured; ~50 net partner openings planned Ex‑war regions up teens; pressure moderating Ex‑war DD growth; war regions DD decline; moderation in Oct Stabilizing
Marketing/loyaltyActive members >37M; >80% sales; full‑funnel investments ~37M members; 93% satisfaction; improving customer metrics ~38M members; >80% sales; “Fragrance Fashionistas” growing Improving
BOPIS & omnichannelBOPIS +60% and ~23% of digital BOPIS about 25% of direct demand BOPIS +~40% and ~25% of digital Strong, moderating growth
Real estate mix~55% off‑mall; continued reshaping >50% off‑mall; ongoing shift ~55% off‑mall; 35 openings/19 closures in Q3 Stable

Management Commentary

  • “We delivered a strong quarter. Net sales were $1.6 billion, up 3%…and earnings per diluted share were $0.49. We beat our guidance on both the top and bottom line, and we are raising our full year guidance…” — Gina Boswell, CEO .
  • “Third quarter gross profit rate of 43.5% was in line with expectations…We will continue to utilize our agile business model…and take appropriate pricing actions to maximize sales and margin.” — Eva Boratto, CFO .
  • “Our adjacent categories of men’s, hair, lip and laundry continue to perform well and year‑to‑date represent approximately 10% of our business…We completed the full U.S. rollout [of laundry] in September.” — Gina Boswell .
  • “Our Fuel for Growth plan is progressing, and we now expect to deliver $150 million of incremental cost savings by year‑end, bringing the 2‑year total to $300 million.” — Gina Boswell .
  • “With around 85% of our products manufactured in North America, we believe we are relatively well positioned for any potential tariff fluctuations.” — Gina Boswell .

Q&A Highlights

  • Candle normalization behind the business: Management sees candle normalization effects moderating, aided by collaborations (e.g., Stranger Things) and seasonal storytelling; does not expect material impact in 2025 and beyond .
  • Margin bridge: Q4 gross margin +40 bps YoY driven by B&O efficiencies and distribution productivity; merch margin expected “flattish” in Q3/Q4; promotions used strategically to drive volume with accretive returns .
  • International outlook: Ex‑war regions show strong DD growth; war regions remain pressured; Q4 international sales expected down mid‑single digits on a reported basis .
  • Marketing cadence and effectiveness: Marketing ~3.5% of sales annually; Q3 up ~100 bps YoY; collabs draw younger demos and drive traffic; rigorous ROAS thresholds and personalized targeting in place .
  • Omnichannel execution: Off‑mall stores outperform mall locations (traffic and conversion); BOPIS +~40% YoY with 25% of digital demand and ~⅓ of BOPIS customers making incremental in‑store purchases .

Estimates Context

  • S&P Global (Capital IQ) consensus estimates for Q3 FY2025 were unavailable due to data access limits at the time of this request.
  • Company results exceeded internal guidance: revenue growth of +3.0% vs guided flat to +2.5%, and EPS of $0.49 vs $0.41–$0.47; management raised full-year guidance accordingly .

Key Takeaways for Investors

  • Positive inflection into holiday: Q3 beat, raised FY guide, and clear product/marketing momentum (Everyday Luxuries, collabs) should support seasonal execution despite calendar headwinds .
  • Margin resilience with levers: Gross margin held in line as BBWI balanced planned promotions with cost savings; Q4 margin expansion expected via B&O/distribution productivity, while merch margin remains disciplined .
  • Healthy engagement engine: Loyalty base (~38M, >80% of sales) and BOPIS growth (~40%, ~25% of digital) underpin traffic and attachment, improving lifetime value dynamics .
  • Adjacent category diversification: Men’s, hair, lip, and laundry are ~10% of sales YTD and growing, with full U.S. laundry rollout completed and lip fixtures driving younger customer adoption .
  • International a medium‑term driver, near‑term headwind: Strong ex‑war demand offset by Middle East pressures; Q4 still down on a reported basis, but October moderation is encouraging .
  • Capital returns intact: Q3 buybacks of 3.2M shares ($99M), FY repurchases expected at $400M; quarterly dividend of $0.20 maintained with intent to grow over time with earnings .
  • Watch Q4 execution and narrative: Promotional agility, collaboration cadence, and tariff resilience (85% North America manufacturing) are central to sustaining demand and mitigating macro/calendar noise .

Additional Relevant Press Releases (Q3 period)

  • Emily in Paris collaboration announced (Sept 30, 2024), expanding cross‑category storytelling and brand cultural relevance into holiday with >50 SKUs and trend-forward fragrances .