Bath & Body Works (BBWI:US) adjusted its annual sales forecast downward on Thursday due to signs of slowing demand preceding the critical holiday season. Customers are reducing spending on non-essential items such as candles and soaps from this specialty retailer.

Analysts have pointed out that the company's product offerings face limited growth potential and are not recession-resistant, primarily due to their higher price points.

Conversely, the combination of high living costs and persistent inflation has led consumers to tighten their budgets, prioritizing essential items like groceries and food over more expensive purchases such as home fragrances and personal care products.

The retailer now anticipates a 2.5% to 4% decline in net sales for 2023, as opposed to the earlier forecast of a 1.5% to 3.5% decline. In comparison, analysts have an average expectation of a 2.07% decline, based on LSEG data.

The beauty and skincare company has also narrowed its forecast for annual adjusted earnings, projecting a profit of $2.90 to $3.10 per diluted share, compared to the previous projection of $2.80 to $3.10.

In the third quarter ending Oct. 28, Bath & Body Works reported earnings of $0.48 per share, surpassing the analysts' average estimate of $0.35 per share. The company attributes this performance to notable improvements in merchandise margin and the ongoing benefits of cost optimization initiatives, as stated by CEO Gina Boswell.

During the same quarter, the Ohio-based company's net sales declined by 2.6% to $1.56 billion, aligning with analysts' expectations.

Congressman Ro Khanna reported lowering his position in the specialty retail company back on August 3, when the stock closed at a price of $37.15. Notably, the stock has declined nearly 14% since the lawmakers' trade.