The advance of digital sales and customers’ ever-evolving needs have led retailers to rethink their business strategies. Those that don’t, may become a casualty, part of the ‘retail apocalypse.’
While the situation is not as bad as it once was, many brick-and-mortar stores who’ve failed to adapt are left with no choice but to file for bankruptcy.
Retailers, such as Bed Bath & Beyond and Christmas Tree Shops, have closed all their stores and filed for Chapter 11, while Tuesday Morning and Rite Aid have started bankruptcy proceedings.
Is Bath and Body Works Closing Permanently as Well? When and Why?
Many people are wondering if Bath and Body Works is closing permanently. The answer is no; the company is not closing permanently or filing for bankruptcy. Instead, Bath and Body Works is aggressively pursuing difficult, but necessary opportunities for business growth.
Bath and Body Works Store Closures and the Mall Exodus
With its updated blue and white look and approximately 1,800 stores, Bath and Body Works (BBWINC) has been a shopping mall staple over the years.
The retailer popular for its three-wick candles, seasonal scents, and the annual Candle Day.
If you’re curious about recent developments, you may be wondering when and why Bath and Body Works is closing some of its stores. During the company’s 4th Quarter 2022 Earnings Call in February 2023, Bath and Body Works announced the closure of 50 stores in 2023.
However, it has not released any information on which stores or when the closures will happen.
According to INVESTORS.BBWINC, this initiative does not mean Bath and Body Works is closing permanently or filing for bankruptcy. Instead, the company has planned a total of 115 projects.
The projects include remodeling 25 White Barn Candle Company stores – its sister brand, and opening approximately 90 “new off-mall stores.”
Taking into account the mall closures, Bath and Body Works stands to grow its square footage by 4%.
Additionally, the company said it’s “investing in our technology, distribution, and logistics capabilities to support our long-term growth.”
Declining Sales
According to the retailer’s February 2023 Earnings Call, the company reports a decrease of 4.6% in net sales compared to the same quarter in 2021.
Wendy Arlin, the company’s chief financial officer (CFO) attributed the financial decline to “inflation, lower demand, and rising wages.”
As a result, the company has experienced pressure from one of its investors, Third Point. With a 6% stake in the company, the investor intends to nominate candidates to the board, which the retailer “strongly disagrees” with.
On Its Own
During the summer of 2021, Bath and Body Works split from Victoria’s Secret. Both companies used to be part of L Brands.
Since the split, Bath and Body Works has made aggressive changes, such as strategically closing mall stores.
During the Earnings Call, Arlin shared that the company is “partnering with external advisers to closely evaluate our cost structure and take action to offset what we see as ongoing cost pressures.”
She expects the retailer will save $200 million per annum. Arlin also shared, “In 2022, we generated over $600 million of free cash flow…we estimate that we are starting the year with $700 million more cash than we need to fund our forecasted working capital needs for the year.”
Furthermore, she added the company may consider “both early debt repayment and share repurchases as potential uses for its cash.”
Brick-and-Mortar Stores
Customers concerned about no longer having a place to browse in person to sample and select their favorite scents need not worry.
Gina Boswell, the company’s chief executive officer (CEO), still believes brick-and-mortar stores are important. However, she acknowledges they have other ways to grow the business.
For example, she said, “While we’re focused in the near term on optimizing the core business, we’ll continue to explore longer term opportunities, such as adding new adjacent categories.”
This includes products for men as well as strengthening their overall position as a home and personal care shop.
The Takeaway
With many retailers closing their doors permanently and filing for bankruptcy, many wonder if Bath and Body Works is headed toward the same fate as it announces the closure of approximately 50 mall stores in 2023.
However, the company’s 4th Quarter 2022 Earnings Call reveals the company is taking an aggressive approach toward short and long-term growth opportunities.
