Bath & Body Works, Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 26 August 2026: press release. Guidance figures: 4 raised, 1 lowered, 3 new. The quarter’s numbers.

Read the filing

Key takeaways

• Net sales fell 2.3% in quarter: Net sales were $1,514 million against $1,549 million a year earlier. Reported diluted EPS was $0.58 versus $0.30. Source
• Tariff refunds lifted reported results: The quarter included about $80 million of tariff refunds. Excluding that benefit, adjusted diluted EPS would have been $0.31 against $0.62 reported. Source
• Full-year EPS guidance raised: Reported diluted EPS guidance is $3.13 to $3.33, up from $3.00 to $3.25. Adjusted EPS guidance is $2.60 to $2.80, up from $2.40 to $2.65. Source
• Third-quarter sales guided lower: Third-quarter net sales are forecast to decline 5% to 2.5% from $1,594 million a year earlier. Third-quarter EPS is forecast at $0.05 to $0.10 reported and $0.07 to $0.12 adjusted. Source
• Body Care improved sequentially: Management cited sequential improvement in Body Care, stronger average unit retail on new products, improved brand discoverability and marketplace momentum. Source
• Direct sales grew for first time since 2021: Management said this quarter marked the first Direct net sales growth since 2021. Direct sales rose 3.0% to $275 million, linked to digital experience enhancements. Source
• Consumer First Formula still early: Management said the proof points strengthen confidence in the strategy, while the company remains in the early stages of the transformation. Source

“Underlying business trends remain pressured, but we are seeing further evidence that elements of the Consumer First Formula are beginning to work.”

Daniel Heaf, chief executive officer of Bath & Body Works

Guidance

What changed from last quarter

• Guidance raised: Full-year reported diluted EPS guidance was raised to $3.13 to $3.33 from $3.00 to $3.25. Source
• Guidance raised: Full-year adjusted diluted EPS guidance was raised to $2.60 to $2.80 from $2.40 to $2.65. Source
• Guidance raised: Free cash flow guidance was raised to approximately $650 million from approximately $600 million. Source
• Guidance raised: Full-year net sales range was narrowed to a decline of 4% to 2.5% from 4.5% to 2.5%. The low end moved closer to zero. Source
• Guidance raised: Forecast net cash from operating activities, in millions, was raised from $870 million to $890 million. Source
• Guidance lowered: Forecast capital expenditures, in millions, were lowered from $270 million to $240 million. Source
• New guidance: Third-quarter guidance was given for net sales, reported EPS and adjusted EPS. Source
• Guidance kept: Guidance continues to assume no share repurchases. Source
• New: The company received about $80 million of tariff refunds in the quarter, which the May release had not assumed. Source
• New: The company repurchased and early extinguished outstanding debt on August 19, 2026, with a forecast $5 million pre-tax loss. Source

Results and growth drivers

• Net sales fell 2.3% in quarter: Net sales were $1,514 million against $1,549 million a year earlier. Reported diluted EPS was $0.58 versus $0.30. Source
• Tariff refunds lifted reported results: The quarter included about $80 million of tariff refunds. Excluding that benefit, adjusted diluted EPS would have been $0.31 against $0.62 reported. Source
• Operating and net income rose: Operating income was $216 million versus $157 million, and net income was $118 million versus $64 million. Year-to-date reported EPS was $1.49 against $0.79. Source

Full-year and third-quarter guidance

• Full-year EPS guidance raised: Reported diluted EPS guidance is $3.13 to $3.33, up from $3.00 to $3.25. Adjusted EPS guidance is $2.60 to $2.80, up from $2.40 to $2.65. Source
• Net sales guidance narrowed: Full-year net sales are now guided to a decline between 4% and 2.5%, compared with 4.5% to 2.5% in May. Source
• Free cash flow guidance increased: Free cash flow guidance rose to approximately $650 million from approximately $600 million. Source
• Third-quarter sales guided lower: Third-quarter net sales are forecast to decline 5% to 2.5% from $1,594 million a year earlier. Third-quarter EPS is forecast at $0.05 to $0.10 reported and $0.07 to $0.12 adjusted. Source

“These proof points strengthen our confidence in the strategy, but we remain in the early stages of the transformation.”

Daniel Heaf, chief executive officer of Bath & Body Works

Demand and product momentum

• Body Care improved sequentially: Management cited sequential improvement in Body Care, stronger average unit retail on new products, improved brand discoverability and marketplace momentum. Source
• Direct sales grew for first time since 2021: Management said this quarter marked the first Direct net sales growth since 2021. Direct sales rose 3.0% to $275 million, linked to digital experience enhancements. Source
• Underlying trends still described as pressured: Management said underlying business trends remain pressured, while citing further evidence that Consumer First Formula elements are beginning to work. Source

Segments and channels

• Store sales fell in U.S. and Canada: Stores in the U.S. and Canada were $1,131 million, down 5.4%. Direct was $275 million, up 3.0%, and International and Other was $108 million, up 24.9%. Source
• International sales rose 24.9%: International and Other includes franchised-store royalties and international and domestic wholesale sales. Year-to-date the segment rose 18.1% to $177 million. Source
• Partner-operated international stores grew: Partner-operated international stores reached 596 after 25 openings and 2 closures. Travel retail stayed at 37 stores. Source

“Our priority remains improving the trajectory of the business while continuing to build the product, brand and marketplace capabilities that we believe will position Bath & Body Works for sustainable, durable growth in 2027.”

Daniel Heaf, chief executive officer of Bath & Body Works

Costs, margins and adjusted items

• Expenses fell on prior-year base: General, administrative and store operating expenses were $476 million versus $483 million in the quarter. Year-to-date they were $832 million versus $920 million, including the first-quarter interchange gain. Source
• Transformation costs excluded from adjusted results: Second-quarter adjusted results excluded $9 million of pre-tax business transformation costs tied to the Consumer First Formula. Source
• Interest expense and other income moved: Interest expense was $63 million versus $68 million, and other income, net was $11 million versus $6 million. The income tax provision was $46 million versus $31 million. Source

Capital, cash and shareholder returns

• Operating cash flow rose year to date: Net cash from operating activities was $316 million year to date, against $145 million. A $62 million tax benefit from resolved tax matters was deducted as a non-cash item. Source
• Debt repaid and extinguished in August: The company repaid $289 million of long-term debt year to date and completed a repurchase and early extinguishment of outstanding debt on August 19, 2026. Source
• No buybacks, dividends continued: No common stock was repurchased in the first half of 2026, against $254 million a year earlier. Dividends paid were $80 million year to date. Source

Strategy and transformation

• Consumer First Formula still early: Management said the proof points strengthen confidence in the strategy, while the company remains in the early stages of the transformation. Source
• Digital shopping experience credited: Management credited a more seamless and engaging shopping experience, built from investments over the past year, for the Direct improvement. Source
• Transformation costs year to date: Business transformation costs were $17 million year to date, against none a year earlier. Leadership transition costs appear as $15 million in the 2025 comparison period. Source

People and leadership

• Interim CFO appointed in May: Tom Javitch was named interim Chief Financial Officer effective upon Eva Boratto's departure. Javitch has been with the company more than 16 years.
• CEO expressed confidence in interim CFO: Heaf said he was confident in Javitch's interim leadership while the search for a successor continues.
• Former CFO stepped down for another role: The May release said Boratto stepped down effective June 12 to take another role.

Coming up, as management said on 26 August 2026

• Position for durable growth in 2027: Management said its priority is to build product, brand and marketplace capabilities to position the company for durable growth in 2027. Source
• Permanent CFO search under way: The May release said the company began a search for a permanent CFO with an executive search firm.

Figures management reported

Risks management discussed

• Demand: Management said underlying business trends remain pressured, even with Direct growth and Body Care improvement in the quarter. Source
• Operational: Management said the company remains in the early stages of the transformation and continues building product, brand and marketplace capabilities. Source
• Financial: Approximately $80 million of tariff refunds were included in reported and adjusted second-quarter results, a one-time item in the quarter. Source

Earlier plans management reported on

• Ahead: Management said second-quarter net sales and EPS results exceeded its guidance given in May. Source
• Not stated: The May release expected the impact to build through the balance of 2026 and more meaningfully into 2027. The August release does not restate that timing.

Other quarters

• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.