Bath & Body Works sales are booming thanks to overwhelming demand for hand sanitizer, soap and the 'affordable luxury' of body care during the pandemic

• L Brands beat Wall Street expectations on Thursday, thanks largely to the continued success of its Bath & Body Works brand which reported 13% year-over-year sales growth.
• The company is in the process of spinning off Victoria's Secret, which reported a whopping decrease in year-over-year sales of 39% as the company struggles to revamp its image.
• Bath & Body Works has experienced especially high growth in its hand sanitizer, soap, body care, and home fragrance categories, according to L Brands CEO Andrew Meslow.

L Brands is cashing in on overwhelming demand for hand sanitizer and soap during the pandemic.

The Columbus, Ohio-based company, which owns Bath & Body Works and Victoria's Secret, outpaced Wall Street expectations on Thursday, despite reporting a decrease in year-over-year sales of 20% for the second quarter of 2020. Bath & Body Works remained a bright spot for the company, impressing with 13% sales growth, while Victoria's Secret — which L Brands is currently in the process of spinning off into its own standalone company — reported a whopping sales decline of 39%.

On a call with investors on Thursday, L Brands CEO Andrew Meslow attributed the success of Bath & Body Work to high demand for soap, sanitizer, body care, and home fragrance products during the pandemic.

According to Menslow, soap and sanitizer have historically composed about 15% of the total business, but during the pandemic these categories have experienced "tremendous growth." Now, the company is looking to continue the momentum even beyond the pandemic.

"We expect that awareness around the importance of that category — washing your hands, using sanitizers when you're not able to wash your hands — will continue even as the pandemic itself hopefully starts to wane away," Meslow said on the call.

Body care has also been a strong area for the company, Meslow said, particularly as stressed and anxious consumers turn to "affordable luxury" amid high unemployment rates and an economic recession.

"[The body care] business has always been relevant to our customers, is even more relevant to her today as an affordable luxury, a way for her to treat herself even when she's unable or unwilling to spend money on perhaps other larger-ticket commodities," Meslow said. "That is an inexpensive way, whether for self-indulgence or to give us a gift."

Additionally, Bath & Body Works has benefited from sequestered Americans seeking ways to spruce up their homes, leading to a growth in home fragrance — a category the company has doubled down on in recent years even before the pandemic, Meslow said.

"Our important home fragrance business that has grown substantially over the last half-decade, also tremendously important to her, both now during the pandemic when we're using our homes as a place of work, a place of teaching in school and a place of refuge and solace," he said.

Still, L Brands has an uphill battle ahead of itself as it looks to officially spinoff Victoria's Secret into the standalone VSNewco. Stuart Burgdoerfer, interim CEO of VSNewco, said on the call that the beleaguered brand is ultimately using the pandemic to recalibrate strategy and offload low performing inventory.

"The pandemic actually creates a real opportunity for us in the positive sense to make substantial change in the profile of inventory purchases," Burgdoerfer said. "That, in combination with what we do believe is being closer to the customer and delivering better fashion and newness and better merchandising fundamentals."