• Net Sales: $2.8 billion in Q4, decreased 4% year-over-year.
• Earnings Per Diluted Share: $2.09, exceeding guidance of $1.94 to $2.07.
• Gross Profit Margin: 46.7%, expanded 80 basis points compared to the prior year.
• SG&A Rate: 22.3% of net sales, in line with expectations.
• Operating Income: $678 million, 24.3% of net sales.
• Inventory: Up 3% year-over-year, clean heading into spring.
• Active Loyalty Membership: Grew 6% year-over-year, with approximately 39 million members.
• Cost Savings: $155 million in 2024 through the Fuel for Growth program.
• Operating Cash Flow: Nearly $900 million in 2024.
• Store Openings: 106 new North American stores, predominantly off-mall.
• International Sales: $84 million in Q4, down 10% year-over-year.
• 2025 Net Sales Growth Expectation: 1% to 3% year-over-year.
• 2025 Earnings Per Share Guidance: $3.25 to $3.60.
• Free Cash Flow: $725 million in adjusted free cash flow for fiscal 2024.
• Share Repurchases: 10.4 million shares for $400 million in 2024.

• Warning! GuruFocus has detected 3 Warning Signs with ALT.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bath & Body Works Inc (NYSE:BBWI) reported net sales of $2.8 billion for Q4, exceeding the high end of their guidance.
• The company successfully executed strategic initiatives, including collaborations with big names like Netflix and Disney, enhancing brand awareness and customer engagement.
• Active loyalty membership grew by 6% year over year, with approximately 80% of sales flowing through the program.
• The Fuel for Growth program delivered $155 million in incremental cost savings in 2024, significantly exceeding initial targets.
• BBWI's Everyday Luxuries line resonated well with younger customers, contributing to growth in the body care segment.

Negative Points

• Net sales decreased by 4% compared to the prior year, impacted by calendar shifts and fewer shopping days between Thanksgiving and Christmas.
• Direct net sales decreased by 9% compared to last year, although BOPIS demand increased.
• International net sales were down 10% from the prior year, with regions affected by the war in the Middle East declining.
• The home fragrance category saw a slight decline in Q4 due to the timing of promotional strategies.
• Gross profit rate for Q1 2025 is expected to be 50 basis points lower compared to the prior year, driven by a higher mix into international net sales.

Q & A Highlights

Q: Gina, what are you most excited about for 2025, and can you provide any details on the Disney collaboration? A: Gina Boswell, CEO: I'm excited about our innovation pipeline, which is underpinned by our fragrance leadership. This includes both our core and adjacent categories. The Disney collaboration is driving customer excitement, showcasing our ability to create exceptional product experiences. This collaboration, along with our marketing and product strategies, positions us well for growth in 2025.

Q: Could you discuss the drivers of revenue growth and traffic acceleration in recent quarters? A: Gina Boswell, CEO: Our traffic acceleration is driven by powerful collaborations like Disney, Emily in Paris, and Stranger Things. These collaborations, along with our three-legged stool strategy of product innovation, marketing, and technology, are sustainable growth drivers. Eva Boratto, CFO, added that sales growth of 2% to 3% is needed to drive operating margin expansion.

Q: Can you explain the rationale behind your full-year sales guidance? A: Eva Boratto, CFO: Our guidance assumes consistent trends with Q4, without material changes to promotional levels or macroeconomic improvements. We aim to deliver or exceed expectations, driven by innovation and potential macro tailwinds. Our agile model allows us to adapt to momentum shifts.

Q: How did the winter semiannual sale perform compared to the summer sale, and what role do collaborations play in your strategy? A: Gina Boswell, CEO: The January semiannual sale met expectations, though inventory levels were lean due to strong holiday sales. Collaborations are key to driving traffic and excitement, offering differentiated storytelling opportunities that complement our promotional strategies.

Q: What are your expectations for international growth and its impact on margins? A: Eva Boratto, CFO: We expect international sales to return to growth, driven by market expansion and existing market growth. While Q1 will see an outsized impact on margins due to shipment timing, the full year should not significantly affect margins, with mid-single-digit growth expected.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.