Columbus, Ohio — Bath & Body Works Inc. saw its stock plunge nearly 25% to a new 52-week low on Thursday after reporting disappointing third-quarter results and slashing its full-year outlook, citing severe "macro consumer pressures." The sell-off deepens the retailer's year-to-date decline to over 50%, prompting CEO Daniel Heaf to announce a major strategic overhaul aimed at cutting $250 million in costs by 2027 and reconnecting with consumers.

The company missed analyst expectations for both earnings and revenue, with adjusted earnings per share of 35 cents versus the anticipated 39 cents. Net income fell to $77 million from $106 million a year ago. In response, management drastically reduced guidance, now expecting fourth-quarter revenue to decline in the high single digits compared to prior estimates of growth, and full-year sales to be down in the low single digits.

A "Consumer First Formula" to Reignite the Core Brand

Heaf attributed the underperformance to a failure to keep pace with evolving consumer demands for "ingredient-led products, modern packaging, and elevated multi-channel experiences," while competitors have adapted. The newly unveiled "Consumer First Formula" turnaround plan represents a decisive strategic pivot back to basics. The company will exit underperforming categories like haircare and men's grooming to refocus squarely on its historic strengths in body care, fragrances, and soaps.

The plan's four pillars aim to spark innovation, reignite the brand through influencer partnerships, win in the marketplace, and improve operational efficiency. This includes revamping its digital platforms and lowering the free shipping threshold in 2026 to boost online engagement—a critical move in today's competitive retail ecosystem.

Navigating a High-Stakes Rebranding Effort

The challenge ahead is formidable. Bath & Body Works must execute a successful brand reinvention maneuver to attract younger consumers while maintaining its loyal core, all against a backdrop of weak consumer sentiment and tariff impacts. The company's acknowledgment that its previous diversification efforts failed underscores the high-stakes nature of this correction.

For investors, the steep sell-off reflects skepticism about the near-term consumer environment and the company's ability to swiftly execute a turnaround. The coming quarters will test whether Bath & Body Works can translate its cost-saving and refocusing plans into tangible sales growth and regained market relevance.