The news: Bath & Body Works’ new CEO is overhauling the company’s strategy as it struggles to revive sales and win over younger consumers despite being a major player in the fast-growing fragrance space.

• Sales fell 1% YoY in Q3 to $1.59 billion, short of expectations for $1.63 billion.
• Bath & Body Works now expects Q4 revenues to decline by high single digits, far from the 1.5% increase analysts were expecting, due to “negative macro consumer sentiment weighing heavily on … purchase intent.”
• The retailer also cut its profit outlook, citing tariffs imposed by the US and other governments.

The strategy: CEO Daniel Heaf’s primary aim is to rejuvenate an organization that he said has become “slow and inefficient.” That has hampered its ability to innovate and led to investments that failed to win over new and younger customers.

To get the company back on track, Heaf is implementing a four-part turnaround plan.

• Refocusing on core categories. Bath & Body Works will abandon efforts to expand into shampoo and men’s grooming and instead double down on its four core categories: body care, home fragrance, soaps, and sanitizers.
• Ecommerce expansion. The company will begin selling on ecommerce marketplaces and other wholesale channels, starting with Amazon in the first half of 2026. That is both a recognition of where more beauty and personal care spending is going, as well as an attempt to capture the $60 million to $80 million in sales currently going to gray market sellers. Bath & Body Works will also update its website to make it easier for shoppers to discover and buy products.
• Reclaiming cultural relevance. The retailer will take a more targeted approach to product promotion and lean on influencer marketing to drive awareness and conversation on social channels.
• Streamlining the organization. Bath & Body Works sees an opportunity to unlock $250 million in cost savings over the next two years as it moves toward a more agile, efficient operating model.

What this means for retailers: Bath & Body Works’ decision to retreat from categories that, on paper, looked like natural extensions of its business is a cautionary tale for many retailers.

While plenty of brands, particularly in fashion, are betting on category expansion to capture more spending from consumers, such extensions can be risky. As Heaf told The Wall Street Journal, “Adjacencies are never quite as adjacent as people think they are.” These ventures can divert resources and focus away from companies’ core revenue drivers, weakening their ability to stay relevant to their customers.

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