Dive Brief:
- Bath & Body Works on Wednesday announced that the company is eliminating around 130 roles, the majority of which are leadership positions, in order to simplify its operating structure.
- The company in its second quarter reported net sales of $1.6 billion, a 5% year-over-year decrease. Operating income came in at $241.8 million, down 37%, while net income for the quarter was $120 million, down 68% compared to the same time period last year.
- Chief Operating Officer Chris Cramer on Monday resigned his position “to pursue other opportunities,” according to an SEC filing. Bath & Body Works doesn’t intend to fill the roll, and the position’s responsibilities will be taken up by other members of the company’s management team.
Dive Insight:
Bath & Body works is in the middle of improving its financial performance and positioning the company for long-term growth, according to Executive Chair and interim CEO Sarah Nash.
Initiatives Bath & Body Works is undertaking include “organizational changes, additional cost control actions and merchandise margin improvement opportunities,” according to the company.
The retailer is expected to save around $30 million in the second half of 2022 due to the layoffs.
“While we are taking aggressive action to control costs and improve overall efficiencies, we remain focused on customer-facing investments, including the upcoming launch of our loyalty program throughout the U.S.” Nash said in a statement.
Nash said that the company is performing better than pre-pandemic levels, even while customers continue to navigate stress from inflation.
Second quarter earnings numbers are the result of shoppers pulling back on discretionary spending combined with gains the company made during the pandemic, according to Neil Saunders, managing director of GlobalData. Bath & Body Works is also experiencing increased competition from other stores in its product categories, including elevated body care at Target and Kohl’s through its Sephora shop-in-shops.
“This nibbles at Bath & Body Works rather than taking big chunks of share away from them – but in this more constrained environment even small movements are very unhelpful,” Saunders said in emailed comments.
Wells Fargo analysts called the second quarter results a “non-event,” especially after the company in July announced that it cut guidance.
Wells Fargo analysts see a potential positive impact of the company’s new loyalty program, which is set to launch next week. They also noted that traffic stabilized and that the company was able to increase promotions and clear excess inventory during the quarter and is “entering the 3Q/Fall selling season in a comfortable position.”
Bath & Body Works agrees. “Looking to the back half of the year, we believe that our planned Fall and Holiday assortments are well-positioned to resonate with our customers and our inventories are clean and forward facing,” Nash said.
