Bath & Body Works Reports Decline in Q3 Net Sales and Profitability

Bath & Body Works, Inc. reported its financial results for the third quarter of fiscal 2025, revealing a slight decline in net sales and profitability compared to the same period in the previous year. The company generated net sales of $1.594 billion, a decrease of $16 million, or 1.0%, from $1.610 billion in the third quarter of 2024. Year-to-date, net sales increased to $4.567 billion, up $47 million, or 1.1%, from $4.520 billion in the prior year. The company's operating income for the third quarter was $161 million, down 26.1% from $218 million in the same quarter last year, reflecting a decrease in both gross profit and an increase in operating expenses.

The decline in operating income was attributed to a lower gross profit margin, which fell to 41.3% from 43.5% in the prior year, driven by increased promotional activity and tariffs impacting merchandise margins. General, administrative, and store operating expenses rose to $497 million, up from $482 million, primarily due to higher payroll costs associated with new store openings and increased healthcare expenses. The company also reported a net income of $77 million for the third quarter, down from $106 million in the same period last year, resulting in a diluted earnings per share of $0.37 compared to $0.49.

In terms of operational developments, Bath & Body Works expanded its store footprint, opening 73 new locations while closing 34, bringing the total number of U.S. stores to 1,821. The company also reported an increase in international sales, which rose by 6.1% to $73 million in the third quarter. However, direct sales in the U.S. and Canada decreased by 7.0%, attributed to a shift in customer preferences towards buy online, pick up in store (BOPIS) options. The company’s total inventory as of November 1, 2025, was $1.251 billion, significantly higher than $734 million at the beginning of the fiscal year, indicating preparations for the holiday season.

Looking ahead, Bath & Body Works acknowledged challenges in the consumer environment, particularly macroeconomic factors affecting purchase intent. The company is implementing a comprehensive growth plan, dubbed "The Consumer First Formula," aimed at revitalizing its brand and product offerings. This plan includes creating innovative products, enhancing digital and in-store experiences, and achieving $250 million in cost savings over the next two years to reinvest in growth initiatives. The company remains focused on addressing internal challenges to return to a growth trajectory, particularly as it navigates a competitive holiday season.