Bath & Body Works (BBWI) Q1 2025 earnings summary

Executive summary

• Q1 2024 net sales were $1.384 billion, down 0.9% year-over-year but exceeded guidance, driven by strong U.S. store growth and new product launches, while international sales declined due to Middle East conflict.

• Diluted EPS was $0.38, up 15% year-over-year on an adjusted basis, above guidance, supported by cost optimization and fulfillment efficiencies.

• Operating income rose to $187 million, with operating margin improving to 13.5% from 12.9% year-over-year.

• Growth in newer categories (men’s, hair, lip, laundry) and successful collaborations (e.g., Netflix Bridgerton) contributed to results.

• Cost optimization initiatives delivered $40 million in Q1, with a target of $100 million in annualized savings for fiscal 2024.

Financial highlights

• Net sales: $1.384 billion, down 0.9% year-over-year, exceeding guidance.

• EPS: $0.38, up 15% from prior year adjusted EPS, above guidance.

• Gross profit: $606 million; gross margin: 43.8%, up 110 bps year-over-year, driven by improved merchandise margin and lower transportation costs.

• SG&A expense rate: 30.3% of net sales, up 60 bps year-over-year, due to higher marketing and wages, partially offset by cost savings.

• Operating income: $187 million, or 13.5% of net sales.

Outlook and guidance

• Full-year 2024 net sales expected to range from down 2.5% to flat year-over-year; guidance raised at the midpoint.

• Gross profit rate expected at ~43.7%; SG&A rate at ~26.7%.

• Full-year EPS guidance raised to $3.05–$3.35.

• Q2 2024 sales expected to be down 2% to flat; EPS forecasted at $0.31–$0.36.

• Return to sales growth anticipated in Q3 and Q4.