Shares of Bath & Body Works (BBWI 26.07%) fell as much as 25.7% on Thursday after the specialty retailer posted disappointing third-quarter results and slashed its full-year outlook. The move came even as the company unveiled a transformation plan to reignite growth in its fragrance and personal-care business.
Image source: Getty Images.
A third-quarter miss and a new plan
In the third quarter of 2025, net sales were $1.59 billion, down 1% year over year, while adjusted earnings per share fell to $0.35 from $0.49. Both figures missed management's expectations and consensus estimates. The softness marked a shift from the second quarter of 2025, when net sales grew 1.5% year over year and adjusted earnings per share held flat year over year.
Management pointed to weaker discretionary spending and higher promotional activity -- one factor that negatively affected demand and another that weighed on profitability. CEO Daniel Heaf noted that the company's third-quarter performance came in below expectations and acknowledged ongoing macro pressure on its core shopper. At the same time, the retailer introduced its Consumer First Formula, a multi-year turnaround plan designed to sharpen product innovation, enhance its brand, and accelerate execution.
NYSE: BBWI
Key Data Points
Guidance reset and valuation
The biggest shock for investors came from the revised forecast. After previously calling for full-year 2025 net sales to grow between 1.5% and 2.7%, management now expects a low single-digit decline. Additionally, adjusted earnings per share is now projected to be at least $2.87, down from a prior range of $3.35 to $3.60 -- and below last year's $3.29.
After today's plunge, the stock trades at less than six times the low end of that adjusted earnings outlook, a modest valuation multiple for a retailer that still generates significant cash flow. Still, the new plan will take time to prove itself, and the guidance cut highlights that near-term trends are negative. For investors, the steep drop improves the entry price, but the risk-reward now depends on whether the Consumer First Formula can stabilize sales and margins in a challenging spending environment.
