Bath & Body Works Raises 2026 Earnings Outlook After Direct Sales Rebound
The company lifted full-year 2026 earnings guidance to $3.13 to $3.33 a share after second-quarter sales of $1.51 billion beat a prior decline forecast.
Bath & Body Works, Inc. (BBWI) reported second-quarter net sales of $1,514 million, a 2.3% decline from $1,549 million a year earlier, a milder drop than the 5% to 3% decline it had forecast. The personal-care retailer raised full-year 2026 earnings guidance and narrowed its sales outlook after the quarter.
Reported earnings were $0.58 a share, compared with $0.30 a year earlier. Adjusted earnings were $0.62 a share, above the prior guide of $0.20 to $0.25 in reported earnings. Operating income was $216 million and net income was $118 million. Gross profit was $692 million.
Chief executive Daniel Heaf said second-quarter results exceeded sales and earnings guidance and that the company is seeing further evidence that elements of the Consumer First Formula are beginning to work, including sequential improvement in Body Care, stronger average unit retail on new product innovation, improved brand discoverability, and continued momentum across marketplace partnerships. He said the quarter marked the first direct net sales growth since 2021.
Direct U.S. and Canada net sales rose 3.0% to $275 million from $267 million. Stores in the U.S. and Canada, which include fulfilled buy-online-pick-up-in-store orders, fell 5.4% to $1,131 million from $1,196 million. International and Other net sales, which include royalties from franchised stores and international and domestic wholesale, rose 24.9% to $108 million from $86 million.
Reported results included about $80 million of tariff refunds received in the quarter. Excluding the refund benefit, second-quarter 2026 adjusted earnings would have been $0.31 a share. Reported results also included $9 million of pre-tax costs, or $7 million after tax, associated with business transformation activities.
The company is narrowing full-year 2026 net sales guidance to a decline of 4% to 2.5% compared with $7,291 million in fiscal 2025, from a prior range of 4.5% to 2.5%. It is raising full-year 2026 earnings guidance to $3.13 to $3.33 a share, compared with $3.11 in fiscal 2025, and adjusted earnings guidance to $2.60 to $2.80. There are no share repurchases assumed in the outlook. Fiscal 2026 free cash flow is now expected at approximately $650 million, up from a prior outlook of approximately $600 million.
For the third quarter of 2026, the company is forecasting net sales to decline 5% to 2.5% compared with $1,594 million in the third quarter of 2025. Third-quarter earnings are expected at $0.05 to $0.10 a share, compared with $0.37 a year earlier, and adjusted earnings at $0.07 to $0.12 a share.
Cash and cash equivalents were $794 million at August 1, 2026. Company-operated stores ended at 1,937 locations, including 1,823 in the U.S. and 114 in Canada, after 37 openings and 27 closings since January 31, 2026. Partner-operated international stores ended at 596. Heaf said the company remains in the early stages of the transformation and that its priority remains improving the trajectory of the business while building product, brand and marketplace capabilities it believes will position Bath & Body Works for sustainable, durable growth in 2027.