Bath & Body Works in 'early stages' of transformation; lifts outlook
Bath & Body Works reported second quarter results that topped Wall Street estimates amid signs that its turnaround is taking hold.
The body care and home fragrance retailer noted that it delivered sequential improvement in body care, stronger AUR (average unit retail) on new product innovation, improved brand discoverability and continued momentum across its marketplace partnerships during the quarter. The quarter also marked the company’s first digital sales growth — with a gain of 3% —since 2021.
“These proof points strengthen our confidence in the strategy, but we remain in the early stages of the transformation,” stated CEO Daniel Heaf. “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.”
During the quarter, Bath & Body Works entered a partnership to bring a curated selection of its “most-loved” products to more than 600 Ulta Beauty stores nationwide and Ulta.com. The company said the initiative reflects its “Consumer First Formula” marketplace strategy to expand beyond its owned stores and digital channels to meet consumers “in the places they already discover, browse and buy beauty, fragrance and self-care products.”
In other signs of progress, Bath & Body Works tripled its sales on Amazon during the quarter. It is now one of the largest candle brands on the platform, Heaf said on the company’s earnings call.
“The channel is attracting a higher mix of new-to-brand consumers who skew younger and more affluent while delivering a higher AUR than our owned channels, reinforcing our confidence that Amazon can expand our reach and drive incremental growth,” he told analysts. “Together, Amazon and Ulta expand discovery, broadening our reach and reinforcing a consistent brand experience across channels while maintaining the strength and distinctiveness of our owned channels."
Heaf also told analysts that Bath & Body Works has decided to exit home care, which includes its laundry and kitchen products.
“The category represents less than 1% of our annual sales and creates disproportionate product and operating complexity without generating the productivity or incremental demand required to justify the cost,” he said.
Second Quarter
Bath & Body Works reported net income of $118 million for the quarter ended Aug. 1, compared to $64 million in the year-ago period. Earnings per share were $0.58 compared to $0.30 last year. Operating income was $216 million compared to $157 million last year.
Adjusted earnings per share were $0.62, adjusted operating income was $225 million and adjusted net income was $125 million. The adjusted earnings included approximately $80 million of tariff refunds received in the quarter. Excluding the refund benefit, second quarter adjusted earnings per share would have been $0.31.
Net sales fell 2.3% to $1.51 billion. Digital sales grew 3%, returning to growth for the first time in five years. In-store sales in stores fell 5.4%.
The company narrowed its full-year net sales guidance. It now expects sakes to decrease between 2.5% to 4%, compared to its previous forecast a decrease between 2.5% and 4.5%.
Bath & Body Works ended the quarter with 1,937 stores.
