Bath & Body Works stock is plunging. What went wrong for the hand-soap and candle maker?

By Tomi Kilgore

Stock heads for worst day in more than five years, as an overreliance on promotions to boost sales have failed to attract new and younger customers

Bath & Body Works' stock plunged after a disappointing earnings report, with the new CEO outlining a series of missteps.

Shares of Bath & Body Works took an historic dive Thursday, after the personal-care and home-fragrance retailer reported a big fiscal third-quarter profit miss and slashed its full-year outlook.

At the same time, Daniel Heaf, who became chief executive in May, announced a transformation plan aimed at fixing what's been ailing the company's sales for years, by adapting to attract new and younger customers.

Heaf said that as sales started to fall, the company (BBWI) had been relying on deeper and more frequent promotions. He noted that "good value and exciting deals" have been part of the Bath & Body Works brand, and that will not change.

"However, overreliance on promotion delivers diminishing returns and erodes brand equity, and that is what has happened here," Heaf said, according to a FactSet transcript of the post-earnings call with analysts. "While all these efforts appealed to our existing consumers, they did not grow our customer base. And we have not attracted a younger consumer."

The stock tumbled 24.7% on Thursday, its biggest one-day selloff since it tanked a record 27.7% at the height of the COVID panic on March 16, 2020. The stock also closed at the lowest price since July 2020.

Another problem Heaf pointed out was that consumers have evolved over the years, and now want more useful, ingredient-led products, with a more interesting backstory and modern packaging. "Our competitors have risen to meet those needs. We have not in some cases," Heaf said.

So to attract "a new and younger consumer," Heaf said the company has been recruiting a network of influencers "to ignite social buzz," all while communicating "credible, science-based claims."

He also plans to aggressively manage costs, with plans to lower expenses by $250 million over the next two years.

Whether Heaf's plan will work, and when, remains to be seen. The company now expects full-year 2025 sales to decline in the "low single digits" percentage range, compared with previous guidance of an increase of 1.5% to 2.7%. That means sales are set to decline for a seventh straight year.

The company also cut its outlook for adjusted earnings per share, which excludes nonrecurring items, to "at least" $2.87, from guidance provided just three months ago of $3.35 to $3.60.

For the latest third quarter, the company saw net income fall 27.4% to $77 million, and adjusted EPS slid to 35 cents from 49 cents to miss the average analyst estimate compiled by FactSet of 39 cents. The margin of that miss was the widest in four years, according to FactSet data.

Third-quarter net sales declined 1% to $1.59 billion, below the FactSet consensus of $1.63 billion.

The stock has dropped 59.7% in 2025, while the S&P 500 index SPX has gained 11.4%.

-Tomi Kilgore

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11-20-25 1616ET