Bath and Body Works looks to men as it seeks return to growth

By Dejah Miles

Overall sales slip, but company sees growth potential in women's lip products

Bath and Body Works Inc. saw sales decline in its latest quarter, but the company is betting on men's products as it looks to return to growth.

The company is best known for women's body lotion, candles and women's fragrances, but it's recently made a push into men's products including aftershave, cologne and lotions. Bath and Body Works (BBWI) sees men's products as a beneficial approach to tackling a new demographic of customers.

"The men's business continues to be one of our fastest-growing categories in body care as we benefit from new forms introduced last year, including grooming and antiperspirant deodorant as well as the newness we infused into the core collection in the first quarter," said Julie Rosen, the company's president, on Bath and Body Works' earnings conference call Tuesday, according to a transcript provided by AlphaSense.

Customers purchasing men's products tend to be slightly younger than the usual demographic of customers.

Men's products are the fastest growing within Bath and Body Works' body-care segment, but Rosen mentioned "relatively low" awareness and said the company has plans to invest to grow visibility.

While the men's collection is growing, Bath and Body Works saw total net sales decline slightly in the most recent quarter. The company reported $1.384 billion in net sales, compared with $1.396 billion a year before.

Chief Executive Gina Boswell said the company is dealing with a "dynamic consumer-spending environment" as shoppers "carefully manage their spending." Additionally, Bath and Body Works turned to sales at the beginning of last quarter to make up for products that weren't proving popular with customers.

The company is turning to lip "fixtures" to get customers more interested in the lip category. The fixtures have scrubs, masks and tints that younger customers enjoy. Lip sales have doubled in stores that already have the fixture, and the company expects to implement this in almost all of its North American locations by July.

Bath and Body Works is also collaborating with Netflix Inc. (NFLX) and has a "Bridgerton"-themed line of candles and creams. This collaboration is the company's first partnership with Netflix, and more are planned for later in the year.

In general, the company saw customer interest in travel-sized products, and is hoping that this will encourage customers to try new shampoos and conditioners.

While management is excited about new initiatives, investors focused more on the guidance for earnings in the current quarter. The company expects earnings per share of 31 cents to 36 cents. Analysts surveyed by FactSet expected 38 cents.

The stock fell 12.9% on Tuesday.

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06-04-24 1827ET

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