Breaking down Bath & Body Works’s struggles and turnaround strategy

Bath & Body Works is the most recent company to join the ever-growing retail turnaround club, announcing its new strategy—”Consumer First Formula”—after its latest performance didn’t quite pass the smell test.

Net sales dropped 1% in the third quarter, while its fourth and typically largest quarter is off to a slow start, performances that “didn’t live up to the expectations we have for this brand,” said Daniel Heaf, a former Nike exec who took the helm in May, on its Q3 earnings call.

Heaf outlined some of the company’s shortcomings: Expansions into adjacent categories haven’t paid off and are distracting from its core. Overreliance on collaborations and promotions “erodes brand equity.” The organization has become “slow and inefficient,” unsuccessful in attracting new and younger shoppers, and hasn’t changed to meet modern consumers’ needs—efficacy, emotive storytelling, and modern packaging among them—like its competitors have.

Because of this, Heaf said “swift and decisive action” is needed. With the Consumer First Formula, future product development will focus on body care, home fragrance, soaps, and sanitizers. New products, including “new forms, vessels, and formulas,” are expected to launch in the second half of next year. In the meantime, it’ll cut down its product offerings, nixing hair and men’s grooming to make stores “less overwhelming,” and focus on trend-forward products and undermarketed core products.

“Some of those biggest fragrances are doing over $250 million a year annually, and they sit on a shelf in the left-hand side of our store, and they operate somewhat like an annuity,” Heaf said. “Customers come in, and they buy them, but we haven’t treated them with the reverence and with the marketing they expect.”

Kristie Lewis, SVP of merchandising, told Retail Brew earlier this year that Bath & Body Works creates 200 scents a year—60% of which are seasonal or limited edition. In February, it debuted a princess-themed Disney collaboration, which it expanded with a villains theme in August that CFO Eva Boratto said didn’t perform as expected on the Q3 earnings call. Future collaborations will be executed more “tactfully,” Heaf said, to ensure quarterly performances won’t hinge on them.

Bath & Body Works will also “reclaim cultural relevance” through influencer marketing and make its products more accessible to new and younger consumers through new channel expansion. It’ll lower the free shipping threshold (currently $100) and launch on Amazon in the first half of 2026. Heaf said the retailer is losing $60–$80 million in “gray market” sales through Amazon and will begin by launching core products on the platform. In August, Bath & Body Works executed its first large-scale distribution expansion outside its stores, when it expanded to college campus bookstores.

Finally, the retailer will zero in on “speed and efficiency” and has brought on new hires like creative product and brand advisor Veronique Gabai, a former Vera Wang and Estée Lauder exec.

Holiday performance has been underwhelming thus far, which Boratto attributed to high competition and low consumer sentiment, as people delay purchases for deeper discounts. The retailer anticipates high single-digit decline for Q4 sales as a result, and it also dropped its full-year outlook from 1.5% to 2.7% growth to low single-digit decline.

Despite the retailer’s bleak outlook, recent acceleration in the beauty category—particularly the fast-growing mass fragrance category core to Bath & Body Works’s offerings—“bodes well” for the holiday shopping season, Larissa Jensen, global beauty industry advisor at Circana, said last week.