Bath & Body Works (BBWI) Q2 2026 Earnings Report

The call showcased several meaningful tactical wins—Q2 results beat guidance, adjusted EPS outperformed and full-year EPS guidance was raised; digital returned to growth, Fruit Fusion demonstrated the new go-to-market playbook, and expanded distribution (Amazon, Ulta) scaled quickly. However, many of the upside results were aided by a one-time tariff refund and the underlying business remains pressured: store sales are down, body care is still underperforming, and full-year and Q3 revenue are still guided to declines. Management emphasized multiyear transformation and prudent investment, but near-term headwinds (tariffs, store traffic, margin deleverage) temper the optimism.

Management narrowed full‑year net sales guidance to down 4.0% to down 2.5% and raised full‑year adjusted EPS to $2.60–$2.80 after Q2 outperformance (Q2 net sales $1.5B, down 2.3%; Q2 adjusted EPS $0.62, which included ≈$80M of tariff refunds that contributed ~530 bps to merchandise margin and would leave EPS ≈$0.31 ex‑refund). They now expect full‑year adjusted gross profit of ~43.3% (including the refund), adjusted SG&A rate ~29.6%, adjusted net non‑operating expense ≈$217M, adjusted tax rate ~26.8% and ~203M weighted average diluted shares; Q3 guidance is net sales down 5% to down 2.5%, gross profit ≈40%, SG&A ≈34.8%, adjusted net non‑operating expense ≈$54M, adjusted tax rate ≈26% and Q3 adjusted EPS $0.07–$0.12. Other updated metrics: capex ~$240M (YTD $98M), free cash flow ~$650M (up from $600M), Fuel for Growth savings ~ $200M (vs. $175M goal), $250M of 2029 notes redeemed, and management is accounting for ~ $30M (≈40 bps) of forward tariff/input cost pressure and ~$35M of incremental Consumer First Formula investments (about 70% of which are weighted to Q3).