The new CEO of Bath & Body Works (NYSE: BBWI) plans to reduce the number of products sold in its stores and focus on its more popular items that appeal to its most loyal customers.
Daniel Heaf, who started his tenure as CEO in May, plans to revamp the fragrance, soap, and candle company’s inventory, which has become less appealing to consumers lately. He has a new strategy in place to reverse the retailer’s slumping sales and regain the confidence of its investors.
Sales at the retailers have declined recently as consumers have faced inflation, higher costs due to recent tariffs, and uncertainty about the outlook of the economy. Purchases of consumer discretionary items have become less of a priority across several industries.
The CEO creates a strategy to change the store’s inventory
Bath & Body Works lost its focus in the past by expanding into other categories, such as personal care, which hurt sales. Shares of the company took a nosedive this year, dropping by 48.5% as shareholders were less confident about the future outlook of the company.
The current number of items being sold is too vast, resulting in the store being “too overwhelming and confusing,” Heaf told analysts during its earnings call.
Some products that have been less popular with customers will be streamlined or cut altogether. The retailer will remove categories that “haven’t grown in the way that we had expected,” he added.
By next spring, products for men’s grooming and hair will no longer be on the shelves at Bath & Body Works, CFO Eva Boratto said during a call with analysts.
The retailer has 40 million customers in its loyalty program that generate 80% of its sales. Part of the strategy is focusing on those 40 million customers who make more frequent purchases. Bath & Body Works has made changes to its loyalty program to encourage more shopping and make it more appealing to those consumers.
“I think that the loyalty customers have continued to drive the strongest retention rate,” said Boratto during a call with analysts. “With our changes in our loyalty program, we’ve seen an increase in reward redemption that brings along with it an incremental spend. We’re seeing good visits, good spend across all of our deciles.”
Heaf is a former Nike executive who served as chief strategy and transformation officer, producing material productivity gains by refocusing resources and investment in product and brand, and also served as senior vice president of digital, digital marketing, customer service, and data at Burberry, where he repositioned the brand digitally.
Bath & Body Works reported the company’s net sales for the third quarter fell by 1% to $1.59 billion, which missed estimates of $1.63 billion.
In response to slower-growing sales, the company said it estimates that fourth quarter 2025 net sales to be down high single digits, citing “the continuation of recent negative macro consumer sentiment weighing heavily on our consumers’ purchase intent. Additionally, our fourth quarter 2025 outlook includes the anticipated impact of all tariff rates currently in effect and levied by the U.S. government and other countries,” in its earnings statement.
The retailer also decreased its full-year 2025 net sales guidance from 1.5 % to 2.7% growth to a decline of low single digits.
The majority of its sales come from its stores in the U.S. and Canada, which generated net sales that totaled $1.2 billion, which is flat versus the prior year. Direct net sales were $299 million, a decrease of 7% compared to last year.
International net sales generated $73 million, an increase of 6% and in line with the company’s expectations. International system-wide retail sales grew 16% in the quarter, a continued acceleration as the business has stabilized since the effects of the war in the Middle East.
Bath & Body Works currently has 1,934 stores in the U.S. and Canada and another 544 international franchised locations, and has been moving its locations away from malls. The retailer currently has 57% of its stores in off-mall locations, and its goal is to have a mix of 75% off-mall stores.
Heaf outlined a new plan to ramp up sales for the retailer, which includes focusing on four new goals to bring customers back and to increase the amount of money they are spending. The company plans to develop new products with new scents, invest in marketing to work on improving the brand, expand into new wholesale partners and channels, and create more efficiency.
His plan includes cutting $250 million in costs during the next two years and will use that money to invest in “revenue-generating initiatives across product and brand,” according to its earnings statement.
Investments for the app and website to draw more customers
Bath & Body Works is also investing in its digital channels by improving its app and has revamped its mobile homepage in an effort to make it easier for customers to find its products, while changing its shipping fee, Heaf said during its earnings call.
“As part of this, we will continue to enhance our app and websites to increase engagement, to make product discovery easier, to deliver richer brand and product stories and to reduce purchase friction,” he said. “This work is already well underway. And in early 2026, we will invest in a permanently lower and more competitive free shipping threshold.”
By the first half of next year, shoppers can find Bath & Body Works via Amazon, which will help the retailer “reach new consumers” while offering “a curated assortment” of evergreen flagship items that have resonated with customers and have been popular.
Bath & Body Works plans to return to its roots, selling two of its iconic scents in the future, which should lure shoppers back into its stores and online as the company seeks to streamline its inventory and sell fewer items. Investors are likely to see a change in revenue growth as the company focuses on selling just lotions, fragrances, sanitizers, and soaps.
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