Bath & Body Works Inc.

Bath & Body Works reported second-quarter net sales of $1.5 billion, down 2.3% year over year but beating its guidance range of down 5% to down 3%, and adjusted earnings per diluted share of $0.62, well above the $0.20 to $0.25 range, including a benefit from about $80 million in tariff refunds. The company raised its full-year adjusted EPS guidance to $2.60 to $2.80 and narrowed net sales guidance to down 4% to down 2.5%, while increasing free cash flow expectations to approximately $650 million. Direct channel sales grew 3% to $275 million, and international and other net sales rose 24.9% to $108 million, but U.S. and Canadian store sales fell 5.4% to $1.1 billion. CEO Daniel Heaf noted progress in digital growth and expanded distribution, with Amazon net sales more than tripling sequentially and Ulta Beauty launching in about 600 stores, but acknowledged continued store traffic pressure and a weak third-quarter outlook with adjusted EPS forecast at $0.07 to $0.12.

Four major retailers reported Wednesday morning, all beating expectations and raising guidance, but a significant portion of those profits came from a Supreme Court decision rather than stronger consumer spending. The court struck down IEEPA tariffs on February 20th, triggering roughly $166 billion in collections from some 330,000 importers, with about $100 billion refunded as of July 31st. Walmart disclosed the largest refund, while Lowe's received $80 million, about one-ninth of Home Depot's amount. Abercrombie & Fitch reported record second-quarter net sales of $1.27 billion, up 5%, and earnings of $4.17 per diluted share, but the IEEPA refund contributed $1.75 per share, making underlying EPS about $2.42. Williams-Sonoma stood out with comparable brand revenue up 6.2%, accelerating from 4.8% last quarter, and raised its full-year outlook. Kohl's beat with EPS of $1.28 against roughly $0.55 expected, and Bath & Body Works beat despite a 2.3% sales decline. The macro data shows consumers feel better about today but worse about tomorrow, with core PCE rising 0.2% month over month. Investors should normalize for tariff refunds, watch how retailers deploy the windfall, and focus on companies that didn't need the help, like Williams-Sonoma and Sam's Club.

Bath & Body Works raised its full-year adjusted earnings forecast on Wednesday after second-quarter results topped guidance, but the company's outlook for the current quarter fell short of analyst expectations, pushing its shares roughly 4% lower in premarket trading. The Columbus, Ohio-based company now expects full-year 2026 adjusted earnings per diluted share of $2.60 to $2.80, up from a prior forecast of $2.40 to $2.65. For the third quarter, Bath & Body Works projected a net sales decline of between 2.5% and 5%, compared with analyst expectations of a 2.9% drop, according to Reuters. Third-quarter adjusted earnings per share are forecast at 7 to 12 cents, against an analyst consensus of 26 cents. Second-quarter net sales reached $1.51 billion, down 2.3% from a year earlier, modestly exceeding the $1.50 billion that analysts had projected, according to Reuters. Adjusted earnings per diluted share were $0.62 for the quarter, boosted by approximately $80 million in tariff refunds; stripping out that one-time item, adjusted earnings per share would have landed at $0.31. Chief executive officer Daniel Heaf pointed to declining store traffic as a persistent drag, while direct online net sales grew 3% in the quarter, the first such increase since 2021, and international and other revenue rose nearly 25%. The company also announced a partnership with Ulta Beauty to sell its products in more than 600 Ulta stores across the U.S. and online, part of a broader push to reach new consumers through expanded retail distribution.

Bath & Body Works has introduced the Reserve Collection, a new home fragrance franchise designed to integrate fragrance into home decor. The collection features five fragrances—Santal + Amber, Sea Salt + Musk, Lavender + Jasmine, Vanilla + Tonka, and Sweet Orange + Agave—available across multiple forms including single-wick and four-wick candles, Wallflowers, room mists, and a new flameless option called Fragrance Infused Liquidless Reed Diffusers. The liquidless reed diffuser retails for $14.95 and delivers up to 30 days of fragrance, while the 30-ounce four-wick ceramic candle retails for $29.95 and provides up to 70 hours of scent. The collection is available now online at bathandbodyworks.com and in stores across the U.S. and Canada, with select products also on Amazon.

Bath & Body Works declared a regular quarterly dividend of US$0.20 per share, payable on September 4, 2026, to shareholders of record as of August 21, 2026. The company is also expanding its brand partnerships, including a Disney The Nightmare Before Christmas collection across themed body care and home fragrance products. Citi has issued a favorable reassessment ahead of earnings, supporting the investment narrative, though risks remain from margin pressure tied to tariffs and higher costs. The company's narrative projects $7.6 billion revenue and $708.4 million earnings by 2029, requiring 1.5% yearly revenue growth and a $18.6 million earnings decrease from $727.0 million today.

Dick's Sporting Goods posted the fastest revenue growth among seven tracked specialty retailers in the first quarter, with sales surging 62.7% year on year to $5.16 billion, beating analyst estimates by 2.1%. Despite also delivering the highest full-year guidance raise in the group, Dick's shares have fallen 6.7% since the report. Bath and Body Works outperformed expectations with a 1.2% revenue beat and the highest guidance raise overall, sending its stock up 17.7%. Best Buy topped estimates by 1.3% on revenue of $8.94 billion and saw its stock jump 32.5%, while Sally Beauty posted the weakest results, missing EPS guidance significantly. Warby Parker exceeded revenue forecasts by 1.3% but issued the weakest full-year guidance update, though its stock still rose 21.9%.

Bath & Body Works has opened its first store in Brazil at Morumbi Shopping in São Paulo and launched a localized digital destination focused on fruity and tropical body care and home fragrances. The company is using a franchise-partner model and Brazil-inspired collections like Viva Brazil and Dreaming of Rio to tailor assortments to regional scent preferences. The move supports the international expansion catalyst but does not meaningfully change near-term risks around digital underperformance and rising costs. The Brazil entry follows earlier efforts like the Fruit Fusion franchise in North America, reinforcing product innovation and international growth as potential offsets to slower domestic growth.

A bullish thesis on Bath & Body Works, Inc. argues the stock is a compelling deep-value turnaround opportunity trading at a trailing P/E of 5.76 and a forward P/E of roughly 7, far below peers such as Ulta Beauty. While revenue has gradually declined from $7.56 billion in fiscal 2023 to approximately $7.25 billion over the trailing twelve months, gross margins have remained consistently between 43% and 44%, and net income has recovered to $727 million on a trailing twelve-month basis. Management is shifting the store footprint toward off-mall locations, which now represent about 60% of stores, with a long-term target of 75% penetration across North America, aiming to offset declining mall traffic. The thesis suggests that even without revenue growth, the company's durable margins and strong cash generation are inconsistent with its current valuation, offering substantial upside if turnaround initiatives succeed.

Bath and Body Works shares rose 3.5% after the company announced a partnership with Ulta Beauty to sell its products in Ulta stores. The collaboration will bring a curated assortment of Bath and Body Works body care and home fragrance products to more than 600 Ulta Beauty stores across the U.S. and its website, starting July 12, 2026. Wells Fargo raised its price target on the stock to $26 from $25, maintaining an Overweight rating. The shares cooled to $21.45, up 3.5% from the previous close.

Bath & Body Works shares rose 5.55 percent on Tuesday to close at $20.72 after the company announced a partnership with Ulta Beauty for nationwide distribution. A curated selection of home fragrance and body care products will be available on Ulta Beauty's website and in its 600 physical stores starting June 12, 2026. The company said the deal reflects its strategy to expand beyond owned stores and digital channels, reaching consumers where they already shop for beauty and self-care products. Bath & Body Works noted it is already seeing encouraging results from selective marketplace expansion.

Bath & Body Works announced a strategic partnership with Ulta Beauty that will bring a curated selection of its body care and home fragrance products to more than 600 Ulta Beauty stores and Ulta.com beginning July 12, 2026. The launch is part of Bath & Body Works' broader marketplace strategy to reposition from a specialty retailer into a category-leading global brand and marks a key step in its Consumer First Formula. The assortment includes signature fine fragrance mists, body creams, hand soaps, 3-wick candles, and Wallflowers, along with the return of nostalgic favorite Juniper Breeze as an Ulta Beauty exclusive. Ulta Beauty, the largest specialty beauty retailer in the U.S. with more than 1,500 stores, sees the partnership as filling a whitespace opportunity in home fragrance and body care categories that complement its existing assortment. Both companies emphasized the discovery-led experience, with Bath & Body Works citing encouraging early results from selective marketplace expansion.

Bath & Body Works shares jumped 8.27 percent to close at $21.07 on Tuesday, extending a four-day winning streak after the company relaunched its June semi-annual sale. The twice-yearly event offers discounts of up to 75 percent and this time features ten archived fragrances, some unavailable for more than a decade, selected through an online poll that drew 200,000 votes. Separately, the company declared a $0.20 per-share dividend payable on June 19 to shareholders of record as of June 5, 2026. The moves follow a first quarter in which net income surged 74 percent to $183 million from $105 million a year earlier, while net sales slipped 3 percent to $1.378 billion from $1.424 billion.