BBWI Q3 Profit Plunges 27% Amidst Sales Dip

TL;DR

**BBWI's profit slide is a red flag; expect continued pressure on margins and a tough holiday season.**

AI Summary

Bath & Body Works, Inc. (BBWI) reported a decline in net income and net sales for the third quarter of 2025 compared to the prior year. Net sales decreased to $1,594 million from $1,610 million in Q3 2024, a 1% reduction. Net income saw a more significant drop, falling to $77 million in Q3 2025 from $106 million in Q3 2024, representing a 27.36% decrease. Year-to-date 2025 net income also decreased to $246 million from $345 million in year-to-date 2024, a 28.7% decline, despite a slight increase in year-to-date net sales to $4,567 million from $4,520 million. The company's operating income for Q3 2025 was $161 million, down from $218 million in Q3 2024. Key business changes include a reclassification of $17 million of Easton investments from current assets to long-term other assets due to a change in the plan of sale. Risks include the seasonal nature of the business, with sales typically highest in the fourth quarter, and foreign currency exchange rate risk for Canadian dollar denominated earnings, which BBWI mitigates using foreign currency forward contracts.

Why It Matters

This filing reveals a concerning trend for BBWI investors, with significant declines in both quarterly and year-to-date net income, signaling potential challenges in profitability despite relatively stable sales. The competitive landscape in personal care and home fragrance is intense, and these results suggest BBWI may be struggling to maintain margins or grow market share against rivals. Employees might face pressure if these trends continue, potentially impacting job security or compensation. For customers, a focus on cost-cutting to improve profitability could lead to changes in product offerings or pricing. The broader market may view these results as indicative of a softening in discretionary consumer spending, particularly in the retail sector.

Risk Assessment

Risk Level: medium — The company experienced a 27.36% decrease in net income for Q3 2025 compared to Q3 2024, falling from $106 million to $77 million. Additionally, year-to-date net income declined by 28.7%, from $345 million in 2024 to $246 million in 2025, indicating a sustained profitability challenge despite a slight increase in year-to-date net sales. This consistent decline in profitability, coupled with a negative total equity (deficit) of $1,592 million, suggests a medium risk profile.

Analyst Insight

Investors should closely monitor BBWI's Q4 performance, as the company states sales are typically highest during this period due to seasonality. Evaluate management's strategies for improving profitability and controlling costs, especially given the significant drop in net income. Consider if the current valuation adequately reflects these declining profit trends.

Financial Highlights

debt To Equity

N/A

revenue

$1,594M

operating Margin

10.1%

total Assets

$4,989M

total Debt

$3,890M

net Income

$77M

eps

$0.37

gross Margin

41.3%

cash Position

$236M

revenue Growth

-1.0%

Key Numbers

• $1,594M — Net Sales (Q3 2025) (Decreased from $1,610M in Q3 2024)
• $77M — Net Income (Q3 2025) (Decreased from $106M in Q3 2024, a 27.36% decline)
• $246M — Net Income (YTD 2025) (Decreased from $345M in YTD 2024, a 28.7% decline)
• $4,567M — Net Sales (YTD 2025) (Increased from $4,520M in YTD 2024)
• $161M — Operating Income (Q3 2025) (Decreased from $218M in Q3 2024)
• $0.37 — Net Income per Diluted Share (Q3 2025) (Decreased from $0.49 in Q3 2024)
• $1,592M — Total Equity (Deficit) (Nov 1, 2025) (Negative equity position)
• $231M — Amounts due under SCF program (Nov 1, 2025) (Increased from $7M as of Feb 1, 2025)

Key Players & Entities

• Bath & Body Works, Inc. (company) — global omnichannel retailer
• Easton (company) — planned community where BBWI has investments
• FASB (regulator) — Financial Accounting Standards Board
• SEC (regulator) — Securities and Exchange Commission
• Bloomberg (company) — financial news organization
• The New York Stock Exchange (regulator) — exchange where BBWI common stock is registered
• White Barn (company) — brand name under which BBWI sells merchandise

FAQ

Risk Factors

• Seasonality of Business [high — operational]: The Company's operations are seasonal, with sales typically highest in the fourth quarter. This concentration of sales creates a risk of not meeting annual targets if the peak season is underperformed.
• Foreign Currency Exchange Rate Risk [medium — financial]: The Company is exposed to foreign currency exchange rate risk, particularly with Canadian dollar denominated earnings. Fluctuations in exchange rates can negatively impact reported earnings. BBWI mitigates this risk using foreign currency forward contracts.
• Inventory Management [medium — operational]: Inventories increased significantly from $734 million on February 1, 2025, to $1,251 million on November 1, 2025. Managing this substantial inventory level, especially given the seasonal nature of sales, poses an operational risk.
• Negative Total Equity [high — financial]: The Company reported a total equity deficit of ($1,592 million) as of November 1, 2025. This negative equity position indicates that liabilities exceed assets, which can be a sign of financial distress and may impact borrowing capacity.
• Increased Short-Term Borrowing [medium — financial]: Amounts due under the SCF program increased substantially from $7 million as of February 1, 2025, to $231 million as of November 1, 2025. This indicates increased reliance on short-term financing, potentially to manage working capital needs.

Industry Context

Bath & Body Works operates in the personal care and home fragrance retail sector, a market characterized by strong brand loyalty and seasonal demand. The competitive landscape includes both direct competitors and a wide array of retailers offering similar products. Trends include a continued shift towards omnichannel sales and a focus on product innovation and sustainability.

Regulatory Implications

As a publicly traded company, Bath & Body Works is subject to SEC regulations regarding financial reporting and disclosures. The reclassification of Easton investments highlights the importance of accurate and timely reporting of asset disposals and changes in strategic intent. Compliance with accounting standards for inventory valuation and revenue recognition is also critical.

What Investors Should Do

1. Monitor inventory levels and turnover ratios closely.
2. Analyze the drivers of declining net income and operating income.
3. Evaluate the sustainability of the business model given the negative equity position.
4. Assess the impact of increased short-term financing.

Key Dates

• 2025-11-01: End of Third Quarter 2025 — Reported net sales of $1,594M, a 1% decrease from the prior year, and net income of $77M, a 27.36% decrease. Total equity was in a deficit of ($1,592M).
• 2025-02-01: End of First Quarter 2025 — Amounts due under SCF program were $7M, significantly lower than the $231M reported by November 1, 2025.
• 2024-11-02: End of Third Quarter 2024 — Reported net sales of $1,610M and net income of $106M. This serves as the comparable period for Q3 2025 performance analysis.

Glossary

Easton Assets Held for Sale

Assets that a company intends to sell within one year. These are typically reported separately on the balance sheet. In this case, $17 million was reclassified from current to long-term assets due to a change in the plan of sale. (Indicates a change in strategic asset disposition plans, impacting current asset classification.)

SCF program

Likely refers to a Supply Chain Finance program, which allows suppliers to receive early payment on their invoices from a third-party financier at a discount. The amounts due represent the company's obligations under such a program. (A significant increase in amounts due ($7M to $231M) suggests a greater reliance on this financing mechanism, potentially for working capital management.)

Accumulated Other Comprehensive Income

A component of shareholders' equity that reports the cumulative amount of unrealized gains and losses that have not been included in net income. For BBWI, this includes foreign currency translation adjustments and cash flow hedge impacts. (Provides insight into unrealized gains/losses that could affect future net income or equity.)

Retained Earnings (Accumulated Deficit)

The cumulative net income of a company that has not been distributed to shareholders as dividends. A deficit means the company has accumulated net losses over time. (BBWI has a significant accumulated deficit of ($1,754 million) as of November 1, 2025, contributing to its overall negative equity position.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, Bath & Body Works reported a 1% decrease in net sales ($1,594M vs. $1,610M) and a more substantial 27.36% decline in net income ($77M vs. $106M). Year-to-date, net sales saw a slight increase ($4,567M vs. $4,520M), but net income dropped by 28.7% ($246M vs. $345M). The company's balance sheet shows a significant increase in inventory and a substantial negative equity position of ($1,592M) as of November 1, 2025, compared to February 1, 2025. Additionally, short-term financing under the SCF program has surged from $7M to $231M.

Key Financial Figures

• $0.50 — ange on which registered Common Stock, $0.50 Par Value BBWI The New York Stock Excha

Filing Documents

• bbwi-20251101.htm (10-Q) — 1098KB
• bbwi-2025111_ex101.htm (EX-10.1) — 102KB
• bbwi-2025111_ex15.htm (EX-15) — 4KB
• bbwi-2025111_ex22.htm (EX-22) — 5KB
• bbwi-2025111_ex311.htm (EX-31.1) — 9KB
• bbwi-2025111_ex312.htm (EX-31.2) — 9KB
• bbwi-2025111_ex32.htm (EX-32) — 5KB
• 0000701985-25-000035.txt ( ) — 5215KB
• bbwi-20251101.xsd (EX-101.SCH) — 34KB
• bbwi-20251101_cal.xml (EX-101.CAL) — 59KB
• bbwi-20251101_def.xml (EX-101.DEF) — 131KB
• bbwi-20251101_lab.xml (EX-101.LAB) — 455KB
• bbwi-20251101_pre.xml (EX-101.PRE) — 312KB
• bbwi-20251101_htm.xml (XML) — 603KB

Financial Information

Part I. Financial Information

Financial Statements *

Item 1. Financial Statements * Consolidated Statements of Income (Unaudited) 3 Consolidated Statements of Comprehensive Income (Unaudited) 3 Consolidated Balance Sheets as of November 1 , 2025 (Unaudited), February 1, 2025 and November 2 , 2024 (Unaudited) 4 Consolidated Statements of Total Equity (Deficit) (Unaudited) 5 Consolidated Statements of Cash Flows (Unaudited) 7

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 8 Report of Independent Registered Public Accounting Firm 15 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 16

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 27

Controls and Procedures

Item 4. Controls and Procedures 28

Other Information

Part II. Other Information 29

Legal Proceedings

Item 1. Legal Proceedings 29

Risk Factors

Item 1A. Risk Factors 29

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 29

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 29

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 29

Other Information

Item 5. Other Information 29

Exhibits

Item 6. Exhibits 30 Signature 31 * The Company's fiscal year ends on the Saturday nearest to January 31. As used herein, "third quarter of 2025" and "third quarter of 2024" refer to the thirteen-week periods ended November 1, 2025 and November 2, 2024, respectively. "Year-to-date 2025" and "year-to-date 2024" refer to the thirty-nine-week periods ended November 1, 2025 and November 2, 2024, respectively. 2 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

FINANCIAL STATEMENTS

Item 1. FINANCIAL STATEMENTS BATH & BODY WORKS, INC. CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts) (Unaudited) Third Quarter Year-to-Date 2025 2024 2025 2024 Net Sales $ 1,594 $ 1,610 $ 4,567 $ 4,520 Costs of Goods Sold, Buying and Occupancy ( 936 ) ( 910 ) ( 2,622 ) ( 2,587 ) Gross Profit 658 700 1,945 1,933 General, Administrative and Store Operating Expenses ( 497 ) ( 482 ) ( 1,418 ) ( 1,345 ) Operating Income 161 218 527 588 Interest Expense ( 68 ) ( 77 ) ( 208 ) ( 236 ) Other Income, Net 10 4 25 65 Income Before Income Taxes 103 145 344 417 Provision for Income Taxes ( 26 ) ( 39 ) ( 98 ) ( 72 ) Net Income $ 77 $ 106 $ 246 $ 345 Net Income per Basic Share $ 0.38 $ 0.49 $ 1.17 $ 1.56 Net Income per Diluted Share $ 0.37 $ 0.49 $ 1.17 $ 1.55 BATH & BODY WORKS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (Unaudited) Third Quarter Year-to-Date 2025 2024 2025 2024 Net Income $ 77 $ 106 $ 246 $ 345 Other Comprehensive Income (Loss), Net of Tax: Foreign Currency Translation ( 2 ) ( 1 ) 4 ( 4 ) Unrealized Gain (Loss) on Cash Flow Hedges 2 — ( 1 ) 2 Reclassification of Cash Flow Hedges to Earnings — — ( 1 ) — Total Other Comprehensive Income (Loss), Net of Tax — ( 1 ) 2 ( 2 ) Total Comprehensive Income $ 77 $ 105 $ 248 $ 343 The accompanying Notes are an integral part of these Consolidated Financial Statements. 3 Table of Contents BATH & BODY WORKS, INC. CONSOLIDATED BALANCE SHEETS (in millions, except par value amounts) November 1, 2025 February 1, 2025 November 2, 2024 (Unaudited) (Unaudited) ASSETS Current Assets: Cash and Cash Equivalents $ 236 $ 674 $ 191 Accounts Receivable, Net 169 205 200 Inventories 1,251 734 1,178 Easton Assets Held for Sale 81 96 — Other 144 114 151 Total Current Assets 1,881 1,823 1,720 Property and Equipment, Net 1,142 1,127 1,158 Operating Lease Assets 967 949 1,029 Goodwill 628 628 628 Trade Name 165 165 165 Deferred Income Taxes 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Description of Business and Basis of Presentation Description of Business Bath & Body Works, Inc. (the "Company") is a global omnichannel retailer focused on personal care and home fragrance. The Company sells merchandise through its retail stores in the United States of America ("U.S.") and Canada, and through its websites and other channels, under the Bath & Body Works, White Barn and other brand names. The Company's international business is conducted through franchise, license and wholesale partners. Fiscal Year The Company's fiscal year ends on the Saturday nearest to January 31. As used herein, "third quarter of 2025" and "third quarter of 2024" refer to the thirteen-week periods ended November 1, 2025 and November 2, 2024, respectively. "Year-to-date 2025" and "year-to-date 2024" refer to the thirty-nine-week periods ended November 1, 2025 and November 2, 2024, respectively. References to "quarter" and "year" each refer to the fiscal calendar period. Basis of Consolidation The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company accounts for investments in unconsolidated entities where it exercises significant influence, but does not have control, using the equity method. Under the equity method of accounting, the Company recognizes its share of the investee's net income or loss. Losses are only recognized to the extent the Company has positive carrying value related to the investee. Carrying values are only reduced below zero if the Company has an obligation to provide funding to the investee. The Company's share of net income or loss of all unconsolidated entities is included in Other Income, Net in the Consolidated Statements of Income. The Company's equity method investments are required to be reviewed for impairment when it is determined there ma

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