COLUMBUS, Ohio, August 26, 2026, 07:12 EDT
- BBWI traded 1.82% down at $17.27 before the market opened at 07:12 EDT.
- Adjusted EPS was $0.62; excluding an $80 million tariff refund, it would have been $0.31.
- Store sales declined by 5.4%, while direct sales registered a 3.0% increase and international sales climbed 24.9%.
- The company increased its fiscal-year adjusted EPS outlook to a range of $2.60-$2.80, up from its previous guidance of $2.40-$2.65.
Bath & Body Works shares pointed down after the company’s quarterly outperformance was largely driven by a tariff refund. Bath & Body Works, Inc. (NYSE: BBWI) traded at $17.27 ahead of Wednesday’s open, down 1.82% from Tuesday’s $17.58 close, as of 07:12 EDT Yahoo Finance quotation.
The response came after shares dropped 8.29% on Tuesday ahead of the earnings announcement. Based on premarket trading, Wednesday’s further fall wiped out approximately $63 million in equity value. The calculation is based on 201.56 million shares in circulation.
Headline adjusted earnings were $0.62 per share, surpassing the firm’s projected guidance of $0.20-$0.25. However, a tariff refund of $80 million accounted for a large portion of this increase. Excluding the refund, adjusted EPS stood at $0.31, the company’s earnings release showed.
The refund represented 35.6% of the quarter’s $225 million in adjusted operating income. This also increased the adjusted gross-margin rate by 5.3 percentage points. Without this benefit, gross margin was 40.4%, a decrease of 90 basis points.
| Q2 measure | Reported | Underlying or prior guide | Investor read-through |
|---|---|---|---|
| Net sales | $1.514 billion | $1.472-$1.503 billion guide | Roughly $11 million above the upper end |
| Adjusted EPS | $0.62 | $0.31 excluding refund; $0.20-$0.25 guide | Core result still topped the guidance |
| Adjusted gross margin | 45.7% | 40.4% excluding refund | Off 90 basis points when omitting refund |
| Adjusted operating income | $225 million | $80 million tariff refund | Refund made up 35.6% of total |
Quarterly sales decreased 2.3% to $1.514 billion. Sales at stores in the U.S. and Canada dropped 5.4% to $1.131 billion. These stores accounted for around three-quarters of the company’s total revenue.
Direct sales climbed 3.0% to $275 million, marking the first quarterly growth since 2021. International and other revenue grew 24.9% to $108 million. Combined, the smaller channels compensated for approximately 46% of the drop in store sales.
Adjusted operating income increased by 30.4% to reach $225 million. Excluding the refund, this amount would have been approximately $145 million, prior to any tax considerations. This comparison underlines that the sales mix has a greater impact than the reported EPS beat.
The retailer lifted its full-year adjusted EPS forecast to a range of $2.60 to $2.80. The midpoint is up 17.5 cents, an increase of 6.9% compared to the previous guidance. Free cash flow is now expected to reach approximately $650 million, $50 million higher than before earnings presentation.
Management is now forecasting 2026 cost savings of approximately $200 million, $25 million more than its original goal. About half of these savings are set to bolster gross margin, while the remainder will cut operating expenses.
Chief Executive Daniel Heaf stated that “underlying business trends remain pressured.” He highlighted ongoing progress in body care and noted better pricing for newly launched products. Direct growth, he added, came after adjustments to the digital experience.
Wall Street opinion is split. The consensus among 18 analysts is Hold, with an average target price of $25.33. Latest recommendations include a Sell from Goldman at $19 and a Buy from Citi at $25 analyst forecast record.
Risks: Adjusted earnings per share for the third quarter are projected between $0.07 and $0.12, below the $0.35 recorded last year. Sales are anticipated to drop by 2.5%-5.0%. Increased store declines or an uptick in promotions may offset gains in the digital and international segments.
Investors will focus on management’s conference call at 08:30 EDT. The main issue is if growth in higher-margin digital can balance softer store performance once the one-off refund is no longer a factor.
