Bath & Body Works (NYSE:BBWI) reported second-quarter results that exceeded its prior outlook, though sales remained under pressure as the retailer invests in product innovation, marketing, digital capabilities and expanded distribution to support a planned return to revenue growth in 2027.
Net sales for the second quarter totaled $1.5 billion, down 2.3% from a year earlier. The result was better than the company’s guidance for a decline of 3% to 5%. Adjusted earnings per diluted share were $0.62, above the prior outlook of $0.20 to $0.25.
Sales trends and category performance
Interim Chief Financial Officer Tom Javitch said the company entered its June semiannual sale with less clearance inventory than it had a year earlier. While the inventory position was healthier for the brand, it reduced second-quarter sales by about one percentage point and affected all categories.
- Body care sales declined by the mid-single digits, though the category improved sequentially from the first quarter.
- Home fragrance sales declined by the low single digits, reflecting a strategic reduction in Halloween assortment and reduced clearance product. Strength in single-wick candles and Wallflower heaters partly offset those pressures.
- Soaps and sanitizers were flat, with newer moisturizing and revitalizing soap formulas supporting performance.
U.S. and Canadian store sales were $1.1 billion, down 5.4% from the prior year. Javitch said store results were affected by lower clearance inventory and an expected shift toward direct sales following the introduction of free shipping on orders over $50 in the fourth quarter of 2025.
Direct-channel sales rose 3% to $275 million, aided by the free-shipping threshold and improved digital conversion. International and other revenue, including expanded-distribution wholesale sales, increased 24.9% to $108 million. International retail sales rose by the high single digits, while international net sales increased by the low double digits due to increased product shipments.
Heaf said the company’s owned digital business returned to growth during the quarter, improving by four percentage points sequentially from the first quarter. He said gains in new, existing and reactivated customers indicated that investments in product storytelling, discovery, personalization and demand creation were beginning to gain traction.
Consumer First Formula initiatives
The company highlighted progress under its “Consumer First Formula,” a multiyear strategy focused on innovative products, brand demand creation, marketplace expansion, and operational efficiency. Heaf said the progress was “real and quantifiable,” but not yet broad or consistent enough to change the overall trajectory of the business.
In body care, Bath & Body Works introduced Fruit Fusion, a hydration-focused franchise featuring dermatologist-approved formulas and more functional packaging. The launch exceeded the company’s sales expectations, achieved a higher average unit retail than its core fragrant body-care assortment and saw several forms sell out, Heaf said.
The company partnered with Hilary Duff as an ambassador and creative partner for Fruit Fusion, supported by a creator-led campaign. Heaf said the campaign generated about 615 million impressions and added more than 50,000 social-media followers. Bath & Body Works plans to add fragrances to Fruit Fusion in September and introduce form extensions in 2027.
The retailer also plans to expand its Everyday Luxuries franchise in the second half with higher fragrance loads, an eau de parfum offering and five new fragrances. It will update its A Thousand Wishes franchise with enhanced fragrance performance, new packaging and a new flanker called A Thousand Wishes Granted.
Bath & Body Works said it will exit its home-care category, including laundry and kitchen products. The category represents less than 1% of annual sales but adds disproportionate product and operating complexity, according to Heaf.
Amazon, Ulta and store actions
Expanded distribution was another area of growth. Amazon sales more than tripled from the first quarter, and Heaf said Bath & Body Works is now among the larger candle brands on the platform. The company offers roughly 10% of its assortment through Amazon, while its owned channels retain the broader seasonal and collaborative assortment.
The company also launched in about 600 Ulta Beauty stores during the quarter. Heaf said the early response has been encouraging, particularly for trial-size and gifting products. He said the company had not observed cannibalization of its own stores or website from expanded distribution but would continue monitoring the issue.
Bath & Body Works completed a merchandising reset across its store fleet, introducing clearer signage and layouts organized by fragrance, form and franchise. Heaf said consumer feedback was positive and store conversion had improved, though traffic remained pressured. The company plans to test additional lease-line marketing, events and other traffic-driving initiatives in hundreds of stores before scaling successful efforts more broadly.
During the quarter, the company opened 24 North American stores, primarily in off-mall locations, and closed 10, primarily in malls. It ended the period with 1,937 North American company-owned stores, about 60% of which were off-mall, plus 596 international locations. International partners opened 17 stores, while Brazil opened in July.
Updated outlook and capital allocation
Bath & Body Works narrowed its full-year sales outlook to a decline of 2.5% to 4%, raising the low end of its previous range. It increased full-year adjusted EPS guidance to $2.60 to $2.80.
For the third quarter, the company forecast sales to decline 2.5% to 5% and adjusted EPS of $0.07 to $0.12. Javitch said the outlook assumes the current consumer and macroeconomic environment continues and does not anticipate the company becoming more promotional to drive sales.
The company expects approximately $30 million in forward tariff pressure and input-cost inflation in the second half, partly offsetting the second-quarter tariff refund. It also plans to invest about $35 million more in the Consumer First Formula, primarily in marketing, with roughly 70% of that incremental spending directed to the third quarter ahead of the holiday season.
Bath & Body Works expects to generate about $200 million in 2026 savings through its Fuel for Growth program, exceeding its prior $175 million target. It lowered expected capital expenditures to approximately $240 million and raised projected free cash flow to about $650 million. The company also redeemed $250 million of its 2029 notes on Aug. 19, which Javitch said would reduce interest expense.
About Bath & Body Works (NYSE:BBWI)
Bath & Body Works, Inc is a leading specialty retailer focused on personal care, home fragrance and complementary products. Through its flagship Bath & Body Works brand, the company offers a diverse assortment of shower gels, lotions, fragrance mists, candles and home fragrance items. Its product portfolio also includes the White Barn Candle Co range of premium scented candles and diffusers. Bath & Body Works serves consumers through a combination of brick-and-mortar stores and e-commerce platforms, delivering seasonal collections, limited-edition releases and signature scent lines.
Founded in 1990 as part of Limited Brands (now L Brands), Bath & Body Works opened its first store in New Albany, Ohio, and quickly expanded across the United States.
