Bath & Body Works (BBWI) Q2 2027 earnings summary

Executive summary

• Q2 2026 net sales were $1.5 billion, down 2.3% year-over-year but above expectations, with adjusted EPS at $0.62, including an $80 million tariff refund; excluding this, EPS was $0.31, still ahead of guidance.

• The Consumer First Formula and transformation initiatives showed early positive results, with sequential improvement in Body Care, a return to digital growth, and expansion in new distribution channels.

• Direct channel net sales grew for the first time since 2021, driven by digital enhancements and improved customer experience.

• The company is narrowing full-year net sales guidance to down 4% to down 2.5% and raising adjusted EPS guidance to $2.60–$2.80.

• 2026 is positioned as an investment year, focusing on product innovation, demand creation, and consistent execution to drive sustainable growth and target revenue growth in 2027.

Financial highlights

• Q2 2026 net sales were $1,514 million, down 2.3% year-over-year, with adjusted operating income at $225 million (14.8% of net sales) and adjusted EPS at $0.62, including tariff refunds.

• Gross profit rate was 45.7%; excluding tariff refunds, it was 40.4%, with gross profit for Q2 at $692 million.

• Inventory ended the quarter down 10% year-over-year, with clean forward inventories.

• Free cash flow guidance raised to $650 million for the year, reflecting higher earnings and lower capex.

• Cash and equivalents at quarter-end were $794 million, up from $364 million a year ago.

Outlook and guidance

• Full-year 2026 net sales expected to decline 4% to 2.5%; adjusted EPS guidance raised to $2.60–$2.80.

• Full-year adjusted gross profit rate expected at 43.3%, including tariff refund benefit.

• Q3 2026 net sales expected to decline 5% to 2.5%, with adjusted EPS forecasted at $0.07–$0.12.

• Capital expenditures for 2026 expected at $240 million, down from prior guidance.

• No share repurchases assumed in full-year guidance.