Bath & Body Works (BBWI) Q2 2025 earnings summary

Executive summary

• Q2 2024 net sales were $1.53 billion, down 2.1% year-over-year, in line with guidance, with adjusted EPS of $0.37 exceeding guidance, driven by margin improvements and cost savings.

• Performance was impacted by a weaker Semi-Annual Sale and value-conscious consumer behavior, but merchandise margin improvements and cost initiatives supported earnings.

• Strategic focus remains on brand elevation, innovation, new category adjacencies, omnichannel experience, and international expansion, with loyalty program membership up 8% to over 37 million, accounting for 80%+ of U.S. sales.

• Cost optimization initiatives delivered $40 million in Q2 and $80 million year-to-date, with a target of $280 million in annual savings.

• Everyday Luxuries and Stranger Things collaborations, digital initiatives, and omnichannel investments are driving customer engagement.

Financial highlights

• Q2 net sales: $1.53 billion, down 2.1% year-over-year; adjusted EPS: $0.37, above guidance; reported EPS: $0.68 due to one-time gains.

• Gross profit rate: 41%, up 110 bps year-over-year; operating income: $183 million, 12% of net sales, flat to last year.

• SG&A as % of net sales: 29.1%, reflecting higher marketing and wage inflation, partially offset by cost savings.

• Cash and cash equivalents at quarter-end were $514 million, down from $1.08 billion at the start of the year.

• Inventory up 6% year-over-year, supporting new launches and stores.

Outlook and guidance

• Full-year 2024 net sales expected to decline 2% to 4% year-over-year; gross profit rate expected at ~44%; SG&A rate at ~27%.

• Adjusted EPS guidance: $3.06–$3.26, down 1% at midpoint; reported EPS: $3.37–$3.57.

• Q3 net sales forecast: flat to up 2.5% year-over-year; EPS $0.41–$0.47.

• Cost savings guidance raised to $130 million for 2024; two-year program targets $280 million run rate savings.

• Full-year share repurchase target increased to $400 million from $300 million.