Bath & Body Works operates in the personal care and home fragrance industry, describing itself as a global leader in these categories. The company sells merchandise through 1,927 company-operated stores in the United States and Canada, its e-commerce sites in the U.S. and Canada, 573 international stores and 34 e-commerce sites in more than 45 other countries, as well as Amazon. The business is highly seasonal, with the fourth quarter, including the holiday selling season, typically accounting for approximately 40% of Net Sales.

The sale of body care, home fragrance and soap and sanitizer products is a highly competitive business with numerous competitors, including individual and chain specialty stores, department stores, online retailers and discount retailers. Brand image, presentation, marketing, design, price, service, fulfillment, assortment and quality are the principal competitive factors. The company states it is a market leader in attractive, growing categories and an iconic brand with global recognition. It has a customer loyalty program with 40 million active members ¹ and benefits from a fast, predominantly domestic, vertically-integrated supply chain.

The company generates revenue through the sale of personal care and home fragrance products across multiple channels: company-operated retail stores in the U.S. and Canada, direct e-commerce sites in the U.S. and Canada, international franchise, license and wholesale arrangements, and through Amazon. Revenue is recognized upon customer receipt of merchandise, with shipping and handling revenues included in Net Sales. The company offers a loyalty program where customers earn points based on purchasing activity, with revenue allocated to points and deferred until rewards are redeemed. Gift card breakage revenue is recognized in proportion to actual redemptions.

The company's product lines include body care products available in multiple forms including fine fragrance mist, body cream, lotion, eau de parfum, body wash, hand soap, sanitizer and more, and home to its famous 3-wick candles. The company's hero product categories include body care, home fragrance and soaps and sanitizers. For fiscal 2025, Stores - U.S. and Canada Net Sales were $5,582 million ², Direct - U.S. and Canada Net Sales were $1,395 million ³, and International Net Sales were $314 million ⁴.

During fiscal 2025, the company opened 94 new North American stores ⁵, nearly all in off-mall locations, and permanently closed 62 stores ⁶, predominantly in malls, resulting in net square footage growth of 2% ⁷. The company launched the Consumer First Formula, a multi-year, comprehensive transformation plan, in the third quarter of 2025. The company launched on Amazon in the U.S. in February 2026. The company repurchased 15.1 million shares of its common stock for $400 million ⁸ during 2025. Subsequent to January 31, 2026, the company issued a notice of redemption for any and all outstanding of its 6.694% Senior Notes due January 2027, expecting the aggregate redemption price to be approximately $289 million ⁹.

For fiscal 2025, total Net Sales were $7,291 million ¹⁰, a decrease of $16 million ¹¹, or 0.2% ¹², compared to fiscal 2024. Operating Income was $1,126 million ¹³, a decrease of $140 million ¹⁴, or 11% ¹⁵, compared to fiscal 2024. Net Income was $649 million ¹⁶, compared to $798 million ¹⁷ in fiscal 2024. Diluted EPS was $3.11 ¹⁸ versus $3.61 ¹⁹ in the prior year. Net cash provided by operating activities was $1,102 million ²⁰.

The company expects 2026 to be a year of disciplined investment behind the Consumer First Formula, balancing rigorous cost control with targeted reinvestment intended to position the business for sustainable long-term growth. The company has plans to deliver $250 million in cost savings over the next two years ²¹, with $175 million expected in fiscal 2026 ²². The company expects that these savings will be used to invest in revenue-generating initiatives across product and brand.

The company's first major growth vector is the Consumer First Formula, a multi-year, comprehensive transformation plan launched in the third quarter of 2025 to revitalize Bath & Body Works across brand, product and marketplace. The plan focuses on four largest revenue driving opportunities: creating disruptive and innovative products in hero categories, reigniting the brand through marketing investment, winning in the marketplace through enhanced digital experience and third-party channels, and operating with speed and efficiency. The company expects this will help attract new, younger consumers and unlock sustainable growth.

The second major growth vector is the expansion of the company's store footprint and marketplace presence. The company is continuing its off-mall expansion with a target mix of 75% off-mall over time given continued consumer preference. In 2026, the company expects North American square footage growth of approximately 1% ²³. The company also launched on Amazon in the U.S. in February 2026 to allow more consumers to discover and shop the brand. Internationally, the company's partner-operated stores grew to 573 ²⁴ as of January 31, 2026, and partners operated 34 international e-commerce sites ²⁵.

The company expects to deliver $250 million in cost savings over the next two years ²⁶, with $175 million expected in fiscal 2026 ²⁷. These savings are expected to be used to invest in revenue-generating initiatives across product and brand. The company's Gross Profit rate was 43.7% ²⁸ in fiscal 2025, which decreased from 44.3% ²⁹ in fiscal 2024, driven by tariffs and partially offset by lower Buying and Occupancy Expenses. The company is focused on optimizing expenses to fuel innovation and long-term performance.

The company has undertaken a multi-year project to modernize and significantly upgrade its digital and information technology systems, capabilities and organization (the IT Transformation Project). The technology roadmap remains on-track, as the company enhances its systems and puts in place foundational tools to enable more personalization and seamless customer engagement. In 2026, the company expects to invest approximately $270 million in capital expenditures ³⁰, focused on high return real estate, Consumer First Formula investments, largely related to product assortment, and logistics and fulfillment upgrades.

The company's capital allocation strategy includes share repurchases and dividends. During fiscal 2025, the company repurchased 15.1 million shares of its common stock for $400 million ³¹ and paid dividends of $0.80 per share ³², totaling $167 million ³³. As of January 31, 2026, the January 2025 Repurchase Program had $117 million ³⁴ of remaining authority. On March 6, 2026, the company paid its first quarter 2026 ordinary dividend of $0.20 per share ³⁵. The company expects to invest approximately $270 million in capital expenditures in 2026 ³⁶.

The company's 2025 performance did not meet its expectations, and management believes macroeconomic pressures impacted consumer sentiment throughout the year. The company also underperformed in its sector. The company anticipates a macroeconomic environment similar to 2025, with continued value-oriented consumer behavior. The company faces risks from general economic conditions, inflation, tariffs, consumer confidence and consumer spending patterns. The company's net sales, results of operations and cash flows are sensitive to these factors.

The company faces execution risks related to the successful implementation of its Consumer First Formula strategic transformation, which is subject to various risks and uncertainties such as changes in consumer demands and trends, general economic conditions, and other risks. Achievement of sustainable growth may require significant investment and may be dilutive to earnings in the short term. The company also faces risks from its ability to attract, develop and retain qualified associates and manage labor-related costs, as the turnover rate in the retail industry is generally high and qualified individuals have been in short supply in some areas.

Management's tone in the filing is one of accountability and disciplined optimism, acknowledging that 2025 performance did not meet expectations while expressing confidence in the strategy and ability to reposition the company. Key themes include the launch of the Consumer First Formula in the third quarter of 2025 as a multi-year, comprehensive transformation plan, and a focus on four largest revenue driving opportunities: creating disruptive and innovative products, reigniting the brand, winning in the marketplace, and operating with speed and efficiency. Management has plans to deliver $250 million in cost savings over the next two years ⁴¹, with $175 million expected in fiscal 2026 ⁴², and expects 2026 to be a year of disciplined investment behind the Consumer First Formula. The company expects North American square footage growth of approximately 1% in 2026 ⁴³ and expects to invest approximately $270 million in capital expenditures ⁴⁴.

For fiscal 2025, total Net Sales were $7,291 million ⁴⁵ compared to $7,307 million ⁴⁶ in fiscal 2024. Net Income was $649 million ⁴⁷ versus $798 million ⁴⁸ in the prior year. Diluted EPS was $3.11 ⁴⁹ compared to $3.61 ⁵⁰ in fiscal 2024. Operating Income was $1,126 million ⁵¹ versus $1,266 million ⁵² in fiscal 2024. Gross Profit was $3,189 million ⁵³ compared to $3,234 million ⁵⁴ in fiscal 2024, with a Gross Profit rate of 43.7% ⁵⁵ versus 44.3% ⁵⁶. Free Cash Flow was $865 million ⁵⁷ in fiscal 2025 compared to $660 million ⁵⁸ in fiscal 2024. The company had cash and cash equivalents of $953 million ⁵⁹ as of January 31, 2026, compared to $674 million ⁶⁰ as of February 1, 2025. Total debt was $3,892 million ⁶¹ as of January 31, 2026, compared to $3,884 million ⁶² as of February 1, 2025. Adjusted Operating Income, which excludes $15 million ⁶³ in Business Transformation Activities and $15 million ⁶⁴ in Leadership Transition Costs, was $1,156 million ⁶⁵ in fiscal 2025. The company's effective tax rate was 26.4% ⁶⁶ in fiscal 2025 compared to 22.4% ⁶⁷ in fiscal 2024. For the Stores - U.S. and Canada segment, Net Sales were $5,582 million ⁶⁸ in fiscal 2025. For the Direct - U.S. and Canada segment, Net Sales were $1,395 million ⁶⁹. For the International segment, Net Sales were $314 million ⁷⁰.

The company's net sales, results of operations and cash flows are sensitive to general economic conditions, inflation, tariffs, consumer confidence and consumer spending patterns, and the company has increased promotional sales during weak economic conditions, which has negatively affected merchandise margin rates. The company's business is highly seasonal, with the fourth quarter typically accounting for approximately 40% of Net Sales ³⁷, and any decrease in sales or margins during this critical period could have a material adverse effect. The company relies on a limited number of vendors, with its largest vendor supplying approximately 12% ³⁸ of total merchandise purchases and its five largest vendors supplying approximately 40% ³⁹ on a combined basis in 2025, and a change in these relationships could have a material effect. The company has substantial indebtedness of $3,892 million ⁴⁰ as of January 31, 2026, and if cash flow from operations declines, the company may be unable to service or refinance its debt. The company faces risks from the successful execution of its Consumer First Formula strategic transformation, which may require significant investment and be dilutive to earnings in the short term.