Bath & Body Works’ massive sanitizer business is a rare winner in the coronavirus crisis

The coronavirus outbreak is evolving into a severe risk to the international economic system. But a minimum of one main U.S. store is seeing a spice up from the COVID-19 crisis: Bath & Body Works.

The attractiveness merchandise chain, which sells merchandise like extremely scented creams and candles, will get about 5% of its annual gross sales from hand sanitizers. That would translate to $260 million in line with Bath & Body Works’ 2019 earnings of $5.34 billion. And that business is booming at this time, Stuart Burgdoerfer, the leader monetary officer of its mum or dad corporate L Brands, advised Wall Street analysts on Thursday.

“It is presently growing at a very high rate for reasons we would all understand,” Burgdoerfer mentioned. According to an investor presentation ultimate week, Bath & Body Works is the best U.S. store for hand sanitizers in addition to merchandise like bathe gel and liquid hand cleaning soap.

There is a lot debate about whether or not hand sanitizers are efficient in opposition to coronavirus. The Center for Disease Control advises other people to scrub their arms with cleaning soap and water as the first choice for fending off contagion. If the ones aren’t to be had, the CDC recommends a sanitizer top in alcohol.

Regardless of the clinical deserves, Bath & Body Works’ expansion is underneath extra scrutiny than same old at the second. The chain’s well being will change into much more necessary to L Brands following the upcoming spin-off of its a lot higher sibling Victoria’s Secret. L Brands mentioned ultimate week it was once promoting a 55% stake in the suffering undies chain to a personal fairness company.

Once that is finished, Bath & Body Works shall be L Brands’ most effective main business. Andrew Meslow, Bath & Body Works’ operations leader, will change into L Brands’ new CEO, changing Lex Wexner.

Bath & Body Works’ monetary efficiency has shielded L Brands to a huge stage from Victoria’s Secret’s staggering implosion since 2015. The store, which operates 1,700 North American shops (together with underneath its White Barn banner) and 260 in a foreign country, had an working source of revenue of $1.1 billion ultimate fiscal 12 months. Meanwhile, Victoria’s Secret misplaced $877 million on gross sales of $7.Five billion. (The logo’s height got here in 2016, when it rang up gross sales of $8.26 billion.)

L Brands’ inventory marketplace worth at its apex in 2015 was once $29 billion; on Thursday was once round $6 billion.

On Thursday Burgdoerfer CFO talked up Bath & Body Works possibilities. One key alternative: extra world growth, given gross sales outdoor North America rose 30% in 2019 over the earlier 12 months.

Another key are for expansion: new shops that shall be positioned in strip shops, reasonably than the conventional shops the place maximum of its shops are positioned, and the place Victoria’s Secret has lengthy been a fixture. Those shops may even lend a hand the chain compete extra without delay with competitors like Target and Ulta.

Burgdoerfer mentioned off-mall Bath & Body Works shops have been extra a hit than the ones within shops at getting customers to if truth be told make purchases and no longer simply browse. And with a cheaper price construction, the ones off-mall shops are way more financially sexy. “The off-mall opportunity is a big one,” he mentioned.

What’s extra, Burgdoerfer mentioned, Bath & Body Works has “a lot of flexibility” with landlords to get the places it desires and negotiate rentals, together with getting out of deficient places previous. And with that, it hopes, keep away from a few of the issues that experience introduced low its soon-to-be-former sibling, Victoria’s Secret.

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