Dive Brief:
- Bath & Body Works reported net sales of $1.5 billion in Q2, down 2.1% year over year and in line with guidance, according to a company press release. Net income was $152 million, up 54% compared to the year-ago quarter.
- Sales for the quarter were impacted by the company’s semi-annual sale, which “fell short of our expectations,” CEO Gina Boswell said on an earnings call last week with analysts.
- Without the impact of the sale, net sales would have been down 1% year over year.
Dive Insight:
Bath & Body Works’ semi-annual sale impacted performance across all categories.
The sale “didn’t really resonate with customers the way it usually does because the store and the marketing didn’t clearly convey that this was a tentpole, major sale event,” Bath & Body Works President Julie Rosen said on a call with analysts. “It was mostly positioned at the front of the store. It didn’t really scream ‘sale’ across the entire store.”
The company responded during the time by adjusting its messaging and floor sets, which slightly improved performance. While the timing and the duration of the sale was the same as last year, “the customer was not quite there in the mindset of a full-on sale,” Rosen said.
Executives said they are taking the sale’s performance as a lesson to evolve the event for next year. “We are looking at the timing, we are looking at the marketing, we are looking at merchandising,” Rosen said.
Identifying problems with store presentation and marketing “is not the first time we’ve seen this as a reasoning for softer demand,” Piper Sandler analysts Korinne Wolfmeyer and Sarah Morin said. However, the company is performing well with its margins, which exceeded expectations, the analysts said.
Additionally, the company said that it is increasing this year’s cost-savings guidance from $100 million to $130 million. Overall, Bath & Body Works is targeting two-year cost savings of $280 million, up from its initial goal of $200 million.
