BBWI Q1 Earnings Call: New CEO Sets Strategic Priorities Amid Revenue Miss

May 29, 2025 at 16:51 PM EDT

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Personal care and home fragrance retailer Bath & Body Works (NYSE: BBWI) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 2.9% year on year to $1.42 billion. Its GAAP profit of $0.49 per share increased from $0.38 in the same quarter last year.

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Bath and Body Works (BBWI) Q1 CY2025 Highlights:

Revenue: $1.42 billion (2.9% year-on-year growth)
Adjusted Operating Income: $209 million vs analyst estimates of $206.4 million (14.7% margin, 1.3% beat)
Revenue Guidance for Q2 CY2025 is $1.54 billion at the midpoint, below analyst estimates of $1.57 billion
EPS (GAAP) guidance for the full year is $3.43 at the midpoint, missing analyst estimates by 3.9%
Operating Margin: 14.7%, up from 13.5% in the same quarter last year
Locations: 2,424 at quarter end, up from 2,341 in the same quarter last year
Same-Store Sales were flat year on year (-2.8% in the same quarter last year)
Market Capitalization: $6.49 billion

StockStory’s Take

Bath & Body Works entered the first quarter under the leadership of new CEO Daniel Heaf, who emphasized the brand’s existing strengths, including a large loyalty program and a vertically integrated supply chain. The company attributed its performance to product innovation—especially the successful Disney collaboration—and continued consumer engagement with both in-store and digital channels. CFO Eva Boratto highlighted the impact of new product launches across core categories, with gifting occasions and men’s products showing particular momentum. While management acknowledged a dynamic macro environment, they pointed to disciplined operational execution and cost management as contributors to improved operating margins.

Looking ahead, Bath & Body Works’ guidance reflects a cautious view on revenue growth, driven by evolving consumer trends and external pressures such as tariffs. CEO Daniel Heaf stated, "We must meet consumers where they are, positioning ourselves as the leading global brand in home fragrance and beauty." The leadership team expects to leverage ongoing product innovation, digital improvements, and expanded marketing to drive engagement. However, management also noted the need to lessen reliance on promotions and to deepen brand connection across key customer segments, particularly younger audiences and men. Planned international growth and digital upgrades are expected to be significant contributors to future results.

Key Insights from Management’s Remarks

Management identified product innovation, focused marketing, and operational discipline as the primary drivers of the quarter’s performance. Deviations from expectations were linked to the timing of promotional events and shifts in consumer traffic patterns.

Disney collaboration impact: The Disney Princess product line exceeded internal expectations, driving traffic both in-store and online, and resulting in record digital engagement with 1.8 billion impressions.
Loyalty program traction: The active loyalty program base rose 4% year-over-year to 39 million members, which management credits for increased trip frequency, retention, and cross-channel purchasing.
Category performance mix: Body Care and Home Fragrance saw low single-digit growth, with innovative launches like Everyday Luxuries and Sweetest Song supporting results, while gifting and men’s products outpaced overall trends.
Operational efficiency focus: The company exited a third-party fulfillment center and maintained flat buying and occupancy costs, which supported margin expansion despite incremental investments in marketing and training.
Store format evolution: New and remodeled stores featuring the Gingham Plus format delivered higher sales and improved customer experience, with management viewing this as a scalable template for future locations.

Drivers of Future Performance

Management’s outlook for the rest of the year centers on driving growth through innovation, digital enhancements, and international expansion, while navigating tariff-related challenges and evolving consumer preferences.

Innovation pipeline: The company plans to launch additional collaborations and new product formats, including an elevated ceramic candle and expanded men’s offerings, which management believes will help sustain top-line momentum, especially in the second half of the year.
Digital and omnichannel investment: A refresh of the website and app is underway, aimed at improving functionality and storytelling, which is expected to enhance customer engagement and online conversion rates.
Tariff and margin management: Management is proactively adjusting inventory and supply chain strategies to mitigate tariff impacts. If tariffs remain at current levels, guidance may trend toward the lower range, but potential reductions could provide upside.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will watch (1) execution of new product launches and collaborations, (2) measurable improvements in digital and omnichannel engagement, and (3) the pace and profitability of international store expansion. Trends in loyalty program engagement and the effectiveness of tariff mitigation strategies will also be important signals for tracking progress.

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