Executive Summary

Q4 delivered above-guidance results: net sales of $2.79B (down 4.3% YoY due to a 53rd-week/calendar shift) and GAAP diluted EPS of $2.09; both exceeded company guidance ranges, driven by stronger traffic/conversion, gross margin outperformance, and lower-than-expected tax rate .
FY25 outlook initiated: net sales growth +1% to +3% and EPS of $3.25–$3.60; Q1 FY25 net sales +1% to +3% and EPS of $0.36–$0.43. Free cash flow guided to $750–$850M; capex $250–$270M; dividend maintained at $0.80; ~$300M share repurchases assumed in FY25 .
New $500M repurchase authorization replaces ~$120M remaining under the prior program; FY24 buybacks totaled 10.4M shares/$400M as the company hit its 2.5x gross adjusted debt/EBITDAR leverage target — supportive capital return catalyst into FY25 .
Key drivers: volume-led growth (AUR down mid-single digits), planned candle promo timing (shifted demand into Q3), cost savings (+$155M in FY24), and loyalty/omnichannel execution (BOPIS +45%, ~39M active loyalty members, 57% off-mall mix) underpin momentum into FY25 .

What Went Well and What Went Wrong

What Went Well
- Beat internal guidance on sales, gross margin, and EPS; Q4 gross profit rate 46.7% (+80 bps YoY) on cost savings and distribution productivity; EPS $2.09 above the high end of $1.94–$2.07 .
- Strong execution in loyalty/omnichannel: BOPIS demand +45% YoY (now ~25% of digital), active loyalty ~39M (+6% YoY), and higher reward redemption, deepening engagement .
- Strategic product and commercialization: Everyday Luxuries resonated with younger customers; collabs (Emily in Paris, Sweethearts; Disney launched in Q1) drove traffic/brand heat; adjacencies (Men’s, Lip, Laundry, Hair) ~10% of sales and accelerating .
What Went Wrong
- Home Fragrance down slightly in Q4 (timing effect from intentional candle promo restage into Q3 and shorter holiday season); net sales were volume-led with mix-adjusted AURs down low-single digits .
- International still modestly pressured in Q4 (reported -10% YoY; mid-single-digit decline ex-53rd week); Middle East conflict impacted certain markets though trends improved into year-end .
- Semiannual sale inventory tighter post-holiday strength, limiting upside in January; January weaker industrywide, though quarter started “pleasingly” overall heading into Easter/Mother’s Day .

Financial Results

Sequential quarterly trend (GAAP)

Metric	Q2 2024	Q3 2024	Q4 2024
Net Sales ($USD Millions)	$1,526	$1,610	$2,788
GAAP Diluted EPS ($)	$0.68	$0.49	$2.09
Operating Income ($USD Millions)	$183	$218	$678
Operating Margin (%)	—	—	24.3%
Gross Profit Margin (%)	—	—	46.7% (+80 bps YoY)
SG&A as % of Sales	—	—	22.3%

Q4 year-over-year comparison (GAAP)

Metric	Q4 2024	Q4 2023	YoY
Net Sales ($USD Millions)	$2,788	$2,912	-4.3%
GAAP Diluted EPS ($)	$2.09	$2.55	—
Operating Income ($USD Millions)	$678	$696	—
Net Income ($USD Millions)	$453	$579	—
Gross Profit Margin (%)	46.7%	—	+80 bps
Operating Margin (%)	24.3%	—	—

Q4 results vs company guidance and Street estimates

Metric	Company Guidance (prior)	Actual Q4	Outcome vs Guidance	Vs Street Estimates
Net Sales	Q4 YoY -6.5% to -4.5% vs $2,912M PY	$2,788M	Above high end	S&P Global consensus unavailable at time of retrieval
GAAP Diluted EPS	$1.94–$2.07	$2.09	Above high end	S&P Global consensus unavailable at time of retrieval

Segment/channel breakdown (reported)

Sales ($USD Millions)	Q4 2024	Q4 2023	YoY
Stores – U.S. & Canada	$2,109	$2,162	-2.4%
Direct – U.S. & Canada	$595	$656	-9.4%
International	$84	$94	-10.1%
Total	$2,788	$2,912	-4.3%

Selected KPIs and operating stats

KPI	Q4 2024 / FY24 Result
Active loyalty members	~39M; +6% YoY
BOPIS demand	+45% YoY; ~25% of digital demand
Gross margin rate	46.7% (+80 bps YoY)
SG&A rate	22.3%
Operating margin	24.3%
Inventory	+3% YoY; “clean” into spring
Off-mall mix	57% of N.A. fleet
Store count (company-operated)	1,895 at FY-end (opened 106, closed 61)
FY24 buybacks/dividends	10.4M shares/$400M buybacks; $177M dividends

Note: Wall Street consensus (S&P Global) could not be retrieved during this request window; therefore, beat/miss vs Street estimates is not quantified.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales Growth	FY2025	—	+1% to +3% vs $7,307M FY24	New
GAAP Diluted EPS	FY2025	—	$3.25–$3.60	New
Free Cash Flow	FY2025	—	$750–$850M	New
Capex	FY2025	—	$250–$270M	New
Non-operating expense	FY2025	—	~$255M	New
Effective tax rate	FY2025	—	~26%	New
Diluted shares (WADSO)	FY2025	—	~213M	New
Buybacks (assumed)	FY2025	—	~$300M	New
Dividend	FY2025	—	~$0.80 per share (annual)	Maintained
Net Sales Growth	Q1 FY2025	—	+1% to +3% vs $1,384M	New
GAAP Diluted EPS	Q1 FY2025	—	$0.36–$0.43	New
Gross margin rate	Q1 FY2025	—	~43.3% (50 bps deleverage YoY)	New
SG&A rate	Q1 FY2025	—	~30.2%	New
Share repurchase authorization	Ongoing	~$120M remaining (Jan’24 program)	New $500M authorization	Increased capacity

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Technology/personalization, loyalty	Investments to drive long-term growth; reiterated marketing/tech focus	Record retention; ~39M active loyalty (+6% YoY); enhanced personalization roadmap	Improving engagement
Supply chain agility	Predominantly U.S.-based supply chain supports execution	U.S.-based supply chain enabled agility (met quad-demic sanitizer demand)	Stable strength
Tariffs/macro	Not highlighted previously	FY25 guidance includes China tariffs; other tariffs excluded; China ~10% supply; Canada+Mexico ~7% combined	New risk included
Product performance	Innovation underscored; Q3 sales +3% as holiday set-up	Body Care up low-single digits; Soaps/Sanitizers mid-single digits; candle demand shifted into Q3 by design	Mixed: core strong, candle timing
International	Q2 Int’l +2% (quarter), YTD down; Q3 Int’l -11%	Reported -10% in Q4; calendar-adjusted mid-single-digit decline; expect return to growth in FY25	Improving trajectory
Adjacencies	Building adjacencies (Men’s, Lip, Laundry, Hair)	~10% of sales; plan to grow mix in FY25+	Expanding

Management Commentary

“Our team delivered strong performance that exceeded expectations on both the top and bottom line in the critical fourth quarter… driven by our product innovation, strong execution and the outstanding customer experience” — CEO Gina Boswell .
“Our net sales growth accelerated from the third quarter to the fourth quarter when normalized for [calendar] factors… gross profit rate of 46.7% exceeded expectations and expanded 80 bps YoY” — CFO Eva Boratto .
“We grew our active loyalty membership 6% year-over-year with approximately 80% of sales flowing through the program” — CEO Gina Boswell .
“Fuel for Growth delivered approximately $155 million of incremental cost savings in 2024, bringing the 2-year total to over $300 million” — CEO Gina Boswell .

Q&A Highlights

Demand/innovation: Disney collaboration is driving traffic; Q1 started “pleasingly”; innovation pipeline underpins confidence in FY25 .
Margin/Leverage math: Requires ~2%–3% sales growth to leverage B&O and ~2.5%–3.5% for SG&A .
Price/mix: Q4 was volume-led with AUR down mid-single digits (mix-adjusted AUR down low single digits) due to shorter holiday and planned promos .
International: Double-digit net sales growth expected in Q1 (timing-driven); mid-single-digit growth for FY25; Q1 margin mix headwind not representative of full year .
Tariffs: China ~10% of supply; Canada and Mexico ~7% combined; FY25 outlook includes China tariffs only; mitigation strategies in place .
Semiannual sale: January SAS generally in line; tighter inventories post-holiday limited upside; exited with clean inventory .
Cash return: Continue $0.80 dividend and ~$300M buybacks in FY25; new $500M authorization in place .

Estimates Context

Street consensus (S&P Global) was unavailable during our request window; thus, we do not quantify beat/miss vs Wall Street on revenue or EPS. Company indicated both Q4 net sales and EPS exceeded internal guidance, with EPS above the high end and net sales above guidance range .
Implication: Given beats vs internal guide, estimate revisions may drift higher on FY25 EPS (range $3.25–$3.60) if early-quarter demand (e.g., Disney, newness) sustains and international returns to growth as planned .

Key Takeaways for Investors

Beat on Q4 sales/EPS vs internal guidance with gross margin +80 bps YoY; volume-led growth and cost savings offset shorter holiday/AUR pressure .
FY25 guide appears prudently set (flat promotions, no macro tailwinds assumed), creating potential for upside if innovation/collabs and international reacceleration materialize; watch candle restage later in 2025 .
Capital return remains a tailwind: new $500M authorization plus planned ~$300M FY25 repurchases and $0.80 dividend; leverage target achieved (2.5x) .
Near-term trading catalysts: Disney collaboration performance, Q1 international shipment timing boosting reported growth, and updates on Everyday Luxuries/adjacencies mix lift .
Medium-term thesis: Durable category leadership, loyalty scale (~39M), expanding off-mall footprint (57%), and multi-year cost/tech programs support margin resilience and cash generation .
Risk watchlist: Tariff exposure (China ~10% of supply), promotional intensity, and international geopolitics; management has embedded China tariffs only and plans mitigations .

Citations:

Q4 FY24 8‑K press release and financials .
Q4 FY24 earnings call (prepared remarks and Q&A) .
Prior quarters (Q2/Q3 FY24) 8‑Ks for trend and prior guidance .

Bath & Body Works, Inc. (BBWI)·Q4 2025 Earnings Summary