Bath & Body Works (BBWI) may have a leg up as retailers scramble to mitigate a potential avalanche of tariffs from Trump’s return to the White House.
CEO Gina Boswell told Yahoo Finance that 85% of its manufacturing is in the US. Most of it is in Beauty Park in New Albany, Ohio, a business park for beauty and personal care suppliers — and a short drive away from Bath & Body’s Columbus headquarters.
Boswell said the company has been “doing a lot of near-shoring and on-shoring” of its product for years.
“One [reason] is minimal exposure. The other reason for having on-shoring is just flexibility with speed and agility. For us, … part of our differentiated model is to be able to get our products in the stores in weeks rather than months,” she explained.
Last week, Trump posted on Truth Social that his administration plans to impose an additional 10% tariff on imports from China and a 25% tariff on imports from Mexico and Canada on Jan. 20, his first day in office.
The president-elect has also floated the idea of a 10% tariff on all imports and 60% on Chinese imports to cut the trade deficit.
Roughly 10% of Bath and Body Works’ production comes from Canada, China, or Mexico. Boswell said the team will look to “mitigate any sort of additional costs” with its suppliers and may only need to raise prices modestly in response.
Bath & Body Works has struggled with consumers and investors as the pandemic beauty boom faded. Its shares are down nearly 14% year to date, compared to the S&P 500’s 27% gain.
The company beat Wall Street’s earnings estimates in Q3 but expects fourth quarter sales declines of 4.5% to 6.5% year over year.
For fiscal 2024, the company expects net sales to decline 1.7% to 2.5% year over year. Adjusted earnings per share are estimated at $3.15 to $3.28, compared to $3.27 in fiscal 2023.
Boswell said the company’s long-term strategy includes elevating core products; expanding to adjacent markets like men’s, hair, and laundry; improving digital sales with in-store pickups; and enhancing operational efficiency.
If the comparison removed the 53rd week from fiscal 2023 and the shorter holiday shopping season, Bath & Body Works has “sequentially improved our top-line sales throughout 2024,” said Boswell.
BMO Capital Markets’ Simeon Siegel told Yahoo Finance’s Wealth the company is one of his top holiday stock picks for the season.
Bath & Body Works has a “nice blend of a staple, of a need-based purchase, as well as a want-based purchase,” alongside “a replenishment nature built-in” and “very nice margin” on its core products like candles and lotions. The stock is currently “viewed with a lot of fear,” said Siegel.