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Bath & Body Works Upgrades Earnings Outlook Following Second-Quarter Beat; Shares Rise

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Bath & Body Works Upgrades Earnings Outlook Following Second-Quarter Beat; Shares Rise

Bath & Body Works (BBWI) shares jumped Wednesday as the company raised its full-year earnings outlook following a fiscal second-quarter beat amid tariff refund tailwinds.

The personal care and home fragrance retailer now expects 2026 adjusted earnings between $2.60 and $2.80 a share, up from its prior outlook range of $2.40 to $2.65. Analysts surveyed by FactSet expect $2.64. Bath & Body Works now projects full-year net sales to decline 4% to 2.5%, compared with its previous forecast calling for a 4.5% to 2.5% to drop.

For the quarter through Aug. 1, adjusted EPS jumped to $0.62 from $0.37 a year earlier, topping Wall Street's views for $0.24. Net sales declined 2.3% to $1.51 billion, while the market expected $1.5 billion.

Second-quarter adjusted EPS included the benefit from about $80 million of tariff refunds, Chief Executive Daniel Heaf said on an earnings conference call, according to a FactSet transcript. Excluding the benefit, the metric would have been $0.31, $0.06 above the high end of the company's outlook range, according to Heaf.

Bath & Body Works shares were up 6.3% in afternoon trade. The stock has lost 6.2% in value so far in 2026.

"While the underlying business remains pressured and our performance is not yet where we want it to be, we are where we expected to be and our teams are moving at pace to execute our strategy," Heaf told analysts. "Our priority in the back half is to continue to strengthen the underlying drivers of sustainable growth, while closely tracking leading indicators to validate our actions are working ahead of our goal of revenue growth in 2027."

Bath & Body Works will exit its home care category, which includes laundry and kitchen products, as the business "creates disproportionate product and operating complexity without generating the productivity or incremental demand required to justify the cost," Heaf said.

For the ongoing quarter, the company expects adjusted EPS between $0.07 and $0.12, compared with the Street's expectations of $0.25. The retailer projects third-quarter net sales to fall between 5% and 2.5%.

"We have been clear since introducing the consumer first formula nine months ago that returning Bath & Body Works to sustainable growth is a multiyear transformation," Heaf told analysts. "2026 remains an investment year."

Last week, cosmetics maker Estee Lauder (EL) bumped up its fiscal 2027 operating margin outlook and set sales guidance in line with its preliminary views. Beauty retailer Ulta Beauty (ULTA) is scheduled to report results Thursday.

Price: $18.86, Change: $+1.28, Percent Change: +7.25%

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