Bath & Body Works — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales for the quarter ended August 1, 2026, were $1,514 million, a decrease of 2.3% compared to $1,549 million in the prior year period.
• Earnings per diluted share were $0.58 for the quarter, compared to $0.30 in the prior year; adjusted earnings per diluted share were $0.62, compared to $0.37 in the prior year.
• Operating income was $216 million for the quarter, compared to $157 million in the prior year; adjusted operating income was $225 million, compared to $172 million in the prior year.
• Net income was $118 million for the quarter, compared to $64 million in the prior year; adjusted net income was $125 million, compared to $78 million in the prior year.
• Reported results included approximately $80 million of tariff refunds; excluding this benefit, adjusted earnings per diluted share would have been $0.31.
• Year-to-date net sales were $2,892 million, down 2.7% from $2,974 million in the prior year.
• Year-to-date net income was $301 million, compared to $169 million in the prior year; adjusted net income was $190 million, compared to $183 million in the prior year.
• Cash and cash equivalents were $794 million as of August 1, 2026, compared to $364 million as of August 2, 2025.
• Total debt (current and long-term) was $3,614 million as of August 1, 2026, compared to $3,888 million as of August 2, 2025.
• Year-to-date operating cash flow was $316 million, compared to $145 million in the prior year.

Guidance and Future Outlook

• Full-year 2026 net sales guidance narrowed to a decline between 4% to 2.5% compared to $7,291 million in fiscal 2025.
• Full-year 2026 earnings per diluted share guidance raised to a range of $3.13 to $3.33, compared to $3.11 in fiscal 2025.
• Full-year 2026 adjusted earnings per diluted share guidance raised to a range of $2.60 to $2.80, compared to $3.21 in fiscal 2025.
• Full-year 2026 free cash flow is expected to be approximately $650 million.
• Third quarter 2026 net sales are forecast to decline between 5% to 2.5% compared to $1,594 million in the third quarter of 2025.
• Third quarter 2026 earnings per diluted share is expected to be between $0.05 and $0.10, compared to $0.37 in the prior year; adjusted earnings per diluted share is expected to be between $0.07 and $0.12, compared to $0.35 in the prior year.
• No share repurchases are assumed in the outlook.

Business Segments and Product Lines

• Direct net sales in the U.S. and Canada grew 3.0% to $275 million, marking the first direct net sales growth since 2021.
• Store sales in the U.S. and Canada decreased 5.4% to $1,131 million.
• International and Other sales increased 24.9% to $108 million.
• Management cited sequential improvement in Body Care, stronger average unit retail (AUR) on new product innovation, and improved brand discoverability.
• Continued momentum was noted across marketplace partnerships.
• Total company-operated stores increased to 1,937 at the end of the quarter (1,823 in the U.S., 114 in Canada), up from 1,927 at the start of the period.
• Total partner-operated stores increased to 596 at the end of the quarter (559 international, 37 travel retail), up from 573 at the start of the period.

Market and Competitive Landscape

• Underlying business trends remain pressured.
• The company operates over 1,900 stores in the U.S. and Canada, 550-plus international locations, and select Ulta Beauty stores.
• Online sales channels include bathandbodyworks.com, Amazon, and Ulta.com.

Risks and Challenges

• Underlying business trends continue to present pressure on the company.
• The transformation strategy is described as being in the early stages.
• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations.

Management Commentary and Tone

• CEO Daniel Heaf stated that second-quarter results exceeded sales and earnings per share guidance.
• Management expressed confidence that elements of the "Consumer First Formula" are beginning to work, citing investments strengthening the customer proposition through a more seamless and engaging shopping experience.
• Heaf noted that while proof points strengthen confidence in the strategy, the priority remains improving the business trajectory while building product, brand, and marketplace capabilities for sustainable growth in 2027.

Other Key Points

• Reported second quarter 2026 results included aggregate pre-tax costs of $9 million ($7 million after tax) associated with business transformation activities.
• Reported second quarter 2025 results included pre-tax costs of $15 million ($14 million after-tax) associated with leadership team transitions.
• Fiscal 2026 adjusted results exclude an $88 million pre-tax gain related to payment card interchange fee litigation settlements received in the first quarter.
• Fiscal 2026 adjusted results include an $8 million pre-tax loss related to the repurchase and early extinguishment of outstanding debt.
• Fiscal 2026 adjusted results include a $3 million pre-tax gain related to the sale of a non-core asset.
• Fiscal 2026 adjusted results include a $62 million tax benefit associated with the resolution of certain tax matters.
• A $5 million pre-tax loss related to debt extinguishment completed on August 19, 2026, is included in forecasted adjusted financial information.
• No share repurchases were made in the first half of fiscal 2026, whereas $254 million was spent on repurchases in the prior year period.
• Dividends paid year-to-date were $80 million, compared to $85 million in the prior year.