Bath & Body Works Reports Slight Decline in Sales and Operating Income for Fiscal Year 2026

Bath & Body Works, Inc. reported a slight decline in financial performance for the fiscal year ending January 31, 2026, with total net sales of $7.291 billion, a decrease of $16 million or 0.2% compared to the previous year. The company's operating income also fell to $1.126 billion, down 11% from $1.266 billion in 2024, reflecting an operating income rate that decreased from 17.3% to 15.4%. The decline in profitability was attributed to increased general, administrative, and store operating expenses, alongside a decrease in the gross profit rate, which was impacted by rising costs, including tariffs.

In terms of strategic developments, Bath & Body Works launched the "Consumer First Formula," a multi-year transformation plan aimed at revitalizing the brand and attracting younger consumers. This initiative includes investments in innovative product development, enhanced marketing efforts, and improvements in digital and in-store experiences. The company also opened 94 new stores in North America, primarily in off-mall locations, while closing 62 stores, resulting in a net increase in store count to 1,927. The company aims to increase its off-mall store presence to 75% over time, reflecting changing consumer preferences.

Operationally, Bath & Body Works reported a customer loyalty program with 40 million active members, contributing to a significant portion of sales. The company also noted a 2% growth in net square footage due to new store openings and remodels. However, direct sales in the U.S. and Canada decreased by 5.4%, primarily due to a shift in consumer behavior favoring in-store pickups over direct online orders. International sales, on the other hand, increased by 4.9%, indicating a positive trend in global markets.

Looking ahead, Bath & Body Works anticipates a challenging macroeconomic environment in 2026, similar to the previous year, with continued value-oriented consumer behavior. The company plans to balance cost control with targeted investments to support its transformation strategy. Management expressed confidence in the company's ability to reposition itself as a premier global brand, aiming for sustainable long-term growth despite the current economic pressures. The company expects to achieve $250 million in cost savings over the next two years, with $175 million anticipated in fiscal 2026, which will be reinvested into revenue-generating initiatives.