Bath & Body Works faces surprising problem as Americans return to malls

I love going to the mall, especially now that many shopping centers offer toddler-friendly activities and events, which makes them a better destination on bad-weather days.

And for as long as I can remember, a mall trip has almost always included a stop at Bath & Body Works, particularly during its holiday sales.

But recent data suggests the shopping habits that helped make the fragrance retailer a mall staple are changing.

Americans are returning to shopping centers, yet Bath & Body Works isn’t necessarily benefiting from the renewed foot traffic.

Visits to indoor malls increased 5% year over year in August 2026, their strongest growth of the year, according to Placer.ai. Open-air shopping centers performed even better, with visits rising 6.6%.

Yet Bath & Body Works reported a 5.4% decline in sales at its U.S. and Canadian stores during the second quarter, even as its direct business grew.

The contrast highlights a challenge faced by one of America’s most recognizable mall brands.

More people visiting shopping centers does not necessarily translate into stronger sales for every retailer.

Bath & Body Works identifies a problem inside its stores

The company’s difficulties extend beyond changing mall traffic.

During its first-quarter earnings call in May, CEO Daniel Heaf acknowledged that some consumers found Bath & Body Works stores overwhelming and difficult to navigate.

Management said the company had conducted extensive consumer research into the issue and planned changes to store navigation beginning in the summer.

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The admission is significant for a retailer whose appeal has traditionally centered on product discovery.

A large selection of fragrances can encourage browsing, but it can also make shopping more complicated for customers who want to find a specific scent, compare products, or make a quick purchase.

Bath & Body Works is now trying to make that experience easier.

The company has also observed an important difference between its locations. During the May earnings call, former CFO Eva Boratto said off-mall stores outperformed mall stores on both traffic and conversion, while its strongest malls outperformed lower-tier shopping centers.

The difference helps explain why Bath & Body Works is reconsidering where it operates its stores. The company has been opening locations in more convenient off-mall shopping centers, while closing stores in declining or vulnerable malls.

As of Aug. 1, Bath & Body Works operated 1,937 company-run stores across the U.S. and Canada. During the first half of 2026, it opened 37 locations and closed 27.

But the company is aiming for a much bigger change in its store footprint. According to its annual report, Bath & Body Works aims to have approximately 75% of its North American stores located outside traditional malls over time, up from roughly 60% currently.

That would leave only about a quarter of its stores in malls, a significant change for a retailer long associated with mall shopping.

In-store sales decline for Bath & Body Works.

tang90246 / Getty Images

Bath & Body Works’ store sales decline as direct sales grow

The retailer’s latest financial results show how differently its shopping channels are performing.

Its U.S. and Canadian stores generated nearly 75% of total revenue during the second quarter, but sales declined 5.4% year over year.

Meanwhile, direct sales, primarily through its online business, increased 3%. I looked up Bath & Body Works sales numbers and created this table:

Bath & Body Works sales by channel, second quarter 2026

Sales channel

Q2 2026 sales

Share of total sales

Year-over-year change

U.S. and Canadian stores

$1.131 billion

74.7%

-5.4%

U.S. and Canadian direct

$275 million

18.2%

+3.0%

International and other

$108 million

7.1%

+24.9%

The company attributed weaker store sales to fewer transactions and lower average purchases. Its direct business, however, benefited from an increase in fulfilled orders.

Management also indicated that lowering its free-shipping threshold to $50 encouraged some customers to shift purchases online.

The figures suggest that although physical stores remain its primary revenue source, shoppers are increasingly using other channels to purchase its products.

A mall comeback does not guarantee a retail comeback

Bath & Body Works’ changing store strategy comes at a time when shopping malls are showing signs of renewed relevance.

An October 2026 Morgan Stanley report titled Return of the Mall Rat: Playing the Mall Revival found that the long-running decline of shopping malls is now easing as younger shoppers return, fashion regains momentum, and shopping centers add more dining and entertainment.

According to survey data cited in the report, 48% of consumers aged 16 to 34 had visited a mall in the previous month, compared with 39% of respondents overall.

Meanwhile, average mall occupancy reached 95.8% in 2026 to date, exceeding the pre-pandemic average of 95.1%.

But the recovery is uneven. Morgan Stanley found that the country’s 200 leading malls have occupancy rates above 95%, while hundreds of lower-quality shopping centers face greater challenges in attracting tenants and maintaining occupancy.

This helps explain why Bath & Body Works is retaining stores in stronger malls while gradually reducing its exposure to weaker locations.

Placer.ai’s research offers another explanation for how shopping habits are changing. In its 2026 mall study, the analytics company identified two distinct shopping occasions: quick, purpose-driven visits and longer outings focused on experiences.

For retailers, it creates two challenges: 

Making shopping convenient for customers who know what they want

Offering enough discovery and excitement to attract those browsing

For Bath & Body Works, both factors are important because it wants its store shopping experience to be less confusing.

As a regular Bath & Body Works shopper, I know exactly where to find my usual shower gel and body lotion.

But figuring out which hand soaps are on sale can still be confusing, particularly when similar products appear in displays throughout the store. Sometimes, the easiest solution is simply to ask an employee.

Bath & Body Works expands through Amazon and Ulta Beauty

The retailer is also finding ways to reach customers who may not otherwise visit one of its stores.

Bath & Body Works has expanded distribution through Amazon and Ulta Beauty, making its products available alongside other brands consumers already shop.

The move is part of a broader effort to reduce its dependence on customers making dedicated trips to Bath & Body Works locations.

The company’s second-quarter results offer an early indication of how its different sales channels are performing. While direct sales increased by 3%, international and other revenue rose by 24.9%, driven by expanded wholesale distribution, including Amazon and Ulta.

However, the growth in these channels has not yet offset the decline in the company’s traditional store business.

The strategy is therefore about more than opening new locations or adding retail partners.

What can shoppers expect next?

Bath & Body Works is entering the holiday shopping season with an unresolved challenge: Its newer shopping channels are gaining traction, but store traffic remains under pressure.

During its second-quarter earnings call in August, Heaf said management was focused on reversing the weakness in store visits.

He also indicated that the company was not counting on an improvement in the broader economy to solve the problem.

For 2026, Bath & Body Works expects total sales to decline between 2.5% and 4%, signaling that its transformation remains a work in progress.

The company is betting that easier-to-shop stores, stronger product discovery, and wider availability can eventually bring customers back.

For shoppers, the changes could mean finding Bath & Body Works products in more convenient locations, navigating its stores more easily, and purchasing familiar fragrances without making a separate trip to the mall.

Related: Discount grocery chain closing all stores as bargain grocers struggle

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