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Good morning! Stephanie Pope loses Boeing COO title, FDA approves new hormone-free IUD for the first time in 40 years, and Bath & Body Works previews macro challenges ahead in 2025. Enjoy your weekend!

- On the scent. After Bath & Body Works beat 2024 expectations on its full-year earnings yesterday, CEO Gina Boswell told me she was "surprised" to see its stock fall—about 12% by the market close.

The market reacted to the retailer's 2025 outlook—which was below analyst estimates, with 1% to 3% growth expected this year. Incoming tariffs from President Donald Trump and uncertain consumer spending combined to dampen Wall Street's enthusiasm for the $7.3 billion seller of personal care and scented home products.

Bath & Body Works argues that those same macro forces give it an advantage. Its supply chain is mostly in the U.S., with about 17% across China, Mexico, and Canada. And while consumers are expected to pull back spending as tariffs boost prices, Boswell sees her products as an "affordable luxury" that maintain appeal in any economy. "When you have a winning product at the right price, the right value, with the right experience and a wide range of price points, you can win in almost any macro," argues Boswell.

She calls her strategy for the business a "three-legged stool" of product innovation, marketing, and loyalty programs. That includes collaborations with Disney and tentpole events like an annual Candle Day sale.

The retailer is also a casualty of its own past success. The purveyor of candles and body lotions saw sales soar during the pandemic. Boswell points out to a skeptical Street that sales are still above where they were in 2019, before that pandemic boom. Overall, the retailer’s stock is down 18% since Boswell took over in December 2022.

"We out-executed what was a challenging macro environment," she says. "But that's because we've been seeing a value-seeking customer pretty much all of 2024."

Emma Hinchliffe
emma.hinchliffe@fortune.com

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