Bath & Body Works Inc (NYSE:BBWI) stock rose 4.01% (As on March 4, 11:26:38 AM UTC-4, Source: Google Finance) after the company reported fourth-quarter results that exceeded analyst expectations, though the company projected weaker sales for 2026 as it undergoes a business transformation. The company’s multi-year Fuel for Growth program targets $250 million in cost savings over two years, with approximately $175 million included in the 2026 guidance.

Moreover, Body care declined mid-single digits below the shop, driven by underperformance in seasonal collections, notably holiday traditions, which did not resonate for the first time in several years. Consumer research shows the body care offerings have become too predictable and that the company need to be more disruptive, modern, benefit-led innovation. On a positive note, Champagne Toast had its strongest year ever, validating the strategy of elevating the core fragrance icons. Home fragrance grew low single digits, performing above shop. Candles were a relatively bright spot, supported by stronger 3-wick and single-wick acceptance, better inventory positioning and disciplined pricing. Soaps and sanitizers also grew low single digits with our pocket bag sanitizers leading the way. In U.S. and Canadian stores, net sales were $2.1 billion, a decrease of 2.6% to the prior year. Direct channel net sales were $579 million, a decrease of 2.5%. When adjusted for buy online, pickup in store, digital outperformed stores. International net sales were $91 million, up 8.6% to the prior year. System-wide retail sales grew 13%.

BBWI in the fourth quarter of FY25 has reported the adjusted earnings per share of $2.05, beating the analysts’ estimates for the adjusted earnings per share of $1.75. The company had reported the adjusted revenue decline of 2 percent to $2.7 billion in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $2.6 billion. The company attributed the quarter’s performance to accelerated innovation and the earlier-than-planned launch on Amazon. The fourth quarter adjusted gross profit rate was 45.7%, a decline of 100 basis points to last year, driven primarily by tariff impacts and partially offset by B&O leverage, which benefited from the Q1 2025 exit of a third-party fulfillment center.

For fiscal 2026, Bath & Body Works issued guidance for adjusted earnings per share of $2.40 to $2.65, with a midpoint of $2.53 that falls below the analyst consensus of $2.59. The company expects net sales to decline between 4.5% to 2.5% compared to $7.3 billion in fiscal 2025. For the first quarter, the company forecasts adjusted earnings per share of $0.24 to $0.30, compared to $0.49 in the first quarter of 2025, with net sales expected to decline 6% to 4%.