Bath & Body Works (NYSE:BBWI) released first-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
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Summary
Bath & Body Works Inc reported a 3% decline in net sales for Q1 2026, with adjusted EPS of $0.32, both slightly ahead of expectations.
The company is focused on its ‘Consumer First Formula’ strategy, aiming to return to sustainable growth through innovation in product offerings and brand reinvigoration.
Future guidance remains unchanged, with expectations for net sales to decline between 2.5% to 4.5% and adjusted EPS of $2.40 to $2.65 for the full year.
Notable product innovations include new moisturizing and revitalizing hand soaps, with a focus on enhancing product benefits and packaging.
Management emphasized strategic marketplace expansion, including a successful launch on Amazon, which is attracting a younger and more affluent customer base.
Operational highlights include a commitment to operating with speed and efficiency, supported by the ‘Fuel for Growth’ program aimed at simplifying business processes.
CEO Daniel Heaf highlighted the challenges and opportunities over the past year, reinforcing confidence in the transformation strategy and future growth potential.
Full Transcript
OPERATOR
Good morning. My name is Melissa and I will be your conference operator today. At this time I’d like to welcome everyone to the Bath and Body Works first quarter 2026 earnings conference call. being recorded. During the question and answer portion, You may ask a question from the phone by pressing Star one. I’ll now turn the call over to Luke Long, Vice President of Investor Relations. Luke, you may begin.
Luke Long (Vice President of Investor Relations)
Good morning and welcome to Bath & Body Works Inc first quarter 2026 earnings conference call. Joining me on the call today are Daniel Heaf, Chief Executive Officer and Eva Barrato, Chief Financial Officer. In addition to this call and this morning’s press release, we have posted a slide presentation on our website that summarizes the information in these prepared remarks and provide some related facts and figures regarding our operating performance and guidance. As a reminder, some of the comments today may include forward looking statements related to future events and expectations for factors that could cause the actual results to differ materially. From these forward looking statements, please refer to the risk factors in Bath & Body Works Inc 2025 Form 10K. Today’s call also contains certain non GAAP financial measures. Please please refer to this morning’s press release and supplemental materials for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measure. With that, I’ll turn the call over to Daniel.
Daniel Heaf (Chief Executive Officer)
Thank you Luke and good morning everyone. Today I’ll walk through our first quarter performance and share an update on the progress we’re making on our Consumer first formula. Our strategy to return Bath & Body Works Inc to sustainable, consistent growth. In the first quarter, net sales declined 3% and adjusted EPS was 32 cents, both ahead of expectations but remain below the standard we expect of our brand. Underlying business trends remain pressured and largely consistent with the past several quarters, reinforcing the necessity of our strategy. We are executing with urgency and remain on track with our transformation roadmap. Based on this performance and with our expectations for the balance of the year, we are reaffirming Our full year 2026 net sales and Earnings Per Share guidance. Since introducing the Consumer First Formula in November, we have been clear that this is a multi year plan to return Bath and Body work to sustainable growth. Our aspiration remains clear to bring together luxury scents, real benefits and unmatched access. Building a brand consumers love, trust and choose every day. The actions we are taking across product, brand and the marketplace are beginning to generate evidence that the strategy is working and we expect the impact to build through the year and become more visible to consumers and in our financials. As we move into 2027, the work has moved from strategy to execution and from execution to early evidence. While there is significant work ahead, the early proof points we are seeing reinforce our confidence that the actions we are taking are the right ones. With that context, let me walk through some of the progress we are making across our four strategic priorities. First, creating disruptive and innovative products. Restarting our innovation engine remains foundational to our strategy, particularly in our Hero categories. We are being more intentional about where we innovate, how we innovate, and how we bring product to market. We are prioritizing our Hero category, focusing on the forms where we have clear authority and telling stories that make the quality, benefit and feeling of our product unmistakable. When we deliver a stronger product offering clearer benefits and sharper execution, the consumer responds better product clearly communicated wins. This was evident in the quarter with the launch of our new moisturizing and revitalizing hand soaps. These products paired our distinctive fragrance with clear consumer benefits, upgraded packaging, focused marketing support and stronger in store and online presentation. More importantly, this launch reflects the model we are building stronger product offerings, clearer benefits, better packaging, focused marketing and sharper execution all working together to drive a powerful consumer response. Strong product acceptance by consumers showed up across multiple metrics. AUR and SKU productivity for the new soap formulas were both up double digits. This reinforces an important point Value is not simply price, it is the quality of the product, the clarity of the benefit and the strength of the experience relative to the price the consumer pays that is the equation we are focused on improving. Body care underperformed the broader business in the quarter. Some of this reflected planned assortment choices, including the increased mix of accessories in our Disney collaboration and actions within our Everyday Luxuries franchise where we pulled back too substantially on the assortment. We identified this quickly and took action. As of this month, we are backing stock with 10 everyday luxury fragrances including our top sellers and we are seeing strong early reads. Everyday Luxuries remain an important long term franchise as part of our broader merchandising architecture, we have clarified the role of key franchises and icons. With everyday luxuries firmly positioned within that portfolio. We are rebuilding the core assortment, increasing fragrance load and expanding into new forms and sizes to support durable growth. Importantly, the broader category remains healthy, which reinforces our conviction that stronger innovation, clearer benefits and more modern and emotive storytelling will improve our body care performance over time. We will also continue to use collaboration strategically as a way to drive engagement, build relevance and support. Key seasonal moments. Disney Princesses 2 built on the insights from the original launch and resonated once again with our existing customer with particular strength in accessories where we broadened the offering this year. I have said that as we move forward, we will use collaborations to build cultural relevance and brand equity, attract new consumers and support our most important franchises and and seasonal Moments. Peeps was an early example of this approach. We kept the collaboration intentionally limited in scale and it drove consumer excitement as it quickly sold out. The energy it created supported our Easter assortment, contributing to a spring collection that was up 9% versus last year. Similarly, our Vera Bradley collaboration served as a complement to our Mother’s Day offering, driving excitement and interest in our brands during this key gifting moment. As we move into the second half of the year, I am excited about the product innovation we will bring to market. Consumers will begin to see upgrades to our Hero categories including new forms such as a flat back hand sanitizer, upgraded vessels including a pump on our moisturizing body wash, higher fragrance loads and more modernized and elevated packaging. All of these innovations have been informed by consumer feedback and designed to strengthen our leadership in our Hero categories by delivering more relevant benefits and better meeting modern consumer expectations. Our new product launches will be supported by bolder marketing, stronger social engagement and in some cases talent partnerships designed to create broader cultural reach. In summary, our product innovation is in early innings. We are encouraged by the results and we expect momentum to build in the back half of the year and continue through 2027. Second reigniting the brand we are modernizing how bath and body work shows up creatively, culturally and emotionally while building a modern demand creation engine. This work is increasingly coming together in a cohesive and consistent way. We are sharpening our positioning, elevating our creative expression and moving towards clearer, more benefit forward storytelling. The goal is simple to be clear about who we are, to make the quality and distinctiveness of our products unmistakable, and to create an experience that makes bath and body works worth choosing time and time again. As part of this evolution is how we engage consumers. We are making creators and influencers a more consistent part of our go to market playbook. Not as a one off tactic, but as a way to build relevance and create demand around our most important launches. For example, during our Vera Bradley launch and Mother’s Day event, we expanded our creator network by hundreds of influencers, extending our reach and reinforcing our elevated brand narrative across the social platforms our consumers use every day. We are also leveraging these capabilities to amplify our key product stories and franchises in a more modern and culturally relevant way. This quarter we applied this playbook to our White Barn Neutrals franchise. We extended the White Barn brand into new and unexpected spaces by partnering with creators who use White Barn Neutrals to elevate their own homes and leverage live ad reads across relevant podcasts to deepen connection and reinforce our product authority as the market leader in beautiful, high quality candles at affordable prices. Our approach resonated. The White Barn Neutrals collection grew approximately 20% in Q1 versus last year and attracted a younger consumer. This builds on our evolved brand expression we are using on Amazon where richer and consistent visual storytelling is helping us show up in a more modern and relevant way and attracting new consumers to the brand. The enriched brand expression will roll out more broadly across our own channels later this year. This will create a more consistent and elevated presence with wherever the consumers encounter the Bath & Body Works Inc brand. We are in the early stages of transforming Bath & Body Works Inc from a specialty retailer to a category leading global brand, one that leads with products, creates desire and builds deeper emotional connection with consumers. Third winning in the marketplace we are focused on meeting consumers wherever they choose to shop in stores, online and across third party platforms. Our global fleet of approximately two and a half thousand doors remains a significant competitive advantage and we are committed to fully leveraging the strength, reach and convenience of that footprint. This includes simplifying the in store experience and improving navigation to make it easier for consumers to discover and shop the products they love. Beginning in July, we will begin to roll out updates across our entire fleet. Consumers will see a more intuitive in store experiencing featuring clearer signage and product layout designed to make the store easier to navigate by fragrance, form and franchise. At the same time, we are strengthening our digital presence to extend our reach and reduce friction, particularly for new and lapsed consumers. Later this year we will relaunch our website with a mobile first experience, stronger storytelling and a faster, more seamless path to checkout. The site will celebrate our fragrant icons including beloved scents such as A Thousand Wishes, giving consumers a richer way to discover and engage with the heroes of our brand. Within our digital business, we are beginning to see early signs of progress including approximately a 10% improvement in conversion among new consumers. While the experience is not yet where we want it to be, this progress reinforces our belief that there is significant opportunity to expand reach, deepen engagement and drive sustainable e commerce revenue over time. Our Amazon business is in its early stages and we are seeing consistent growth week over week. In line with our plan, the channel is helping us reach consumers who are not shopping with us through our own channels. With a meaningful skew towards younger and more affluent consumers, we are delivering higher aur on Amazon relative to our own channels. We view Amazon as an important complement to our own platforms and we are learning thoughtfully, refining and scaling our presence beyond our owned marketplace. Channels International remains a key pillar of our strategy. In the quarter, retail sales were up double digits despite near term pressure in the Middle East. The business represents a compelling opportunity with a long Runway for high return, asset, light franchise growth outside of North America. Across all of our channels, our objective is to be in the path of the consumer, spark discovery and ensure bath and body work shows up clearly, consistently, whenever and wherever consumers choose to shop. Finally, operating with speed and efficiency underpinning all of our work is a commitment to operating with greater speed, focus and discipline. Through our multi year Fuel for Growth program, we are simplifying the business, removing unnecessary complexity and reallocating resources towards the areas that most directly impact the consumer. These efforts are helping fund investment in product innovation, brand relevance and digital acceleration while maintaining a strong financial foundation. In conclusion, early consumer response to initial Consumer First Formula actions support the logic of the strategy and reinforce our conviction in the path we are on. We are executing with urgency and discipline and early proof points are beginning to emerge across the business reinforcing our confidence that the actions we are taking today will drive more meaningful and sustainable impact over time. This is a comprehensive transformation. We are building the foundation to reposition Bath & Body Works Inc from a specialty retailer into a category leading global brand with the discipline required to return the company to sustainable long term growth. With that, I’ll turn over to EVA to review our first quarter financial results.
Eva Barrato (Chief Financial Officer)
Thank you Daniel and good morning everyone. Today I’ll provide the details of our first quarter results and provide an update on our Q2 and fiscal year 2026 guidance. Beginning with the first quarter, net sales were $1.4 billion down 3.2% versus last year and ahead of our guidance range. As Daniel noted, the underlying business trends remain pressured consistent with the past several quarters and our category performance reflects the same themes we’ve shared previously, the need to deliver consumer right innovation, elevate the brand and ensure availability across all channels. Body Care declined mid teens below the shop and our expectations. As Daniel mentioned, the deceleration in performance was largely driven by everyday luxury assortment changes and a mixed shift towards accessories in our Disney Princess 2 collaboration. The underlying trends within the body Care portfolio remain pressured and as we have said previously, we have taken steps to refocus on our core and better align our product with evolving consumer expectations. We will bring bold innovation to our body care assortment. In the back half of the year. Home fragrance declined low single digits. Candles performed slightly above the shop, supported by strategic pricing actions and solid results in the neutrals line, partially offset by softness in wallflowers. Soaps and sanitizers grew low single digits with continued strength in sanitizers and solid performance in soaps driven by our new moisturizing and revitalizing formulas. In U.S. and Canadian stores, net sales were $1.1 billion, a decrease of 4.3% to the prior year. Direct channel net sales were $246 million, a decrease of 1.5%, benefiting from a reduction to our free ship threshold to $50, normalized for our free shipping threshold change. Digital and stores performed comparably. International and other net sales, which is inclusive of domestic third party wholesale revenues, were $70 million, up 9% to the prior year. International net sales were up 5% in line with expectations. Our first quarter adjusted gross profit rate was 42.7%, slightly above expectations and a decline of 270 basis points. Adjusted merchandise margin rate declined 210 basis points primarily driven by tariffs, inflation and crude oil impact totaling approximately 130 basis points and category mix mix. Adjusted AUR was flat versus prior year. B and O dollars were flat as expanded store occupancy costs were offset by the closure of a fulfillment center in Q1 of last year. B and O deleveraged as a result of sales declines. Adjusted SG&A dollars were also flat with rate of 31.7% better than expected due to incremental cost savings and timing. The increase in adjusted SG and a rate of 100 basis points versus last year due to sales decline as investments associated with the Consumer first formula. Increases in inflation and merit were offset by our fuel for growth bringing it all together. Adjusted operating income was $151 million, 11% of net sales and adjusted earnings. Per diluted share of 32 cents was slightly ahead of our expectations. Inventory ended the quarter down 10% to prior year. We’re confident with our inventory levels going into Q2. Turning to real estate, approximately 60% of our fleet is in off mall locations and in the quarter we opened 13 new North American stores all off mall and closed 17 stores primarily in malls. International partners opened eight stores and closed two stores in the first quarter. We ended the quarter with 579 international locations. Now moving to guidance for the Fiscal Full Year 2026 confirming all elements of our guidance with net sales guidance range of down 4.5% to down 2.5% and adjusted earnings per share guidance range of $2.40 to $2.65. A few additional points to note, our guidance does not include any share repurchases. Our guidance assumes energy prices remain elevated for the remainder of the year and finally, our guidance does not assume any benefit from potential tariff refunds. As a reminder, tariffs represented an approximate $80 million cost in fiscal 2025 and our current guidance assumes the impact of tariffs and inflationary pressures will be roughly neutral year over year. You can find additional commentary on the details of our full year guidance in our slide presentation. Turning now to the second quarter, we expect net sales of down 5% to down 3%. International net sales are expected to be down low to mid single digits primarily related to a decline in shift product sales to our Middle east partners due to ongoing conflict. International retail sales are expected to grow low double digits in line with Q1. We expect second quarter gross profit rate to be approximately 40% reflecting higher store occupancy and deleverage due to sales declines as well as product transformation investments. We expect second quarter SGA rate to be approximately 31.8% reflecting net sales, deleverage and inflation and merit impacts and investments associated with the consumer first formula partially offset by fuel for growth savings. Our second quarter outlook includes net non operating expense of approximately $56 million, a tax rate of approximately 29.3% and weighted average diluted shares outstanding of approximately 203 million. Considering these inputs, we we are forecasting second quarter earnings per diluted share of $0.20 to $0.25. Looking forward to Q3, we expect greater transformation investments affecting both product and marketing. This is consistent with our expectations in our original full year guidance which we reaffirmed today. Now for a quick update on capital allocation. We are a strong cash flow generating business and our top priority remains driving sustainable long term profitable growth through strategic investments in the business. For the first quarter our capital expenditures totaled $49 million and we returned $40 million to shareholders through dividends in 2026. We continue to expect to invest approximately $270 million in capital expenditures focused on high return real estate, consumer first formula investments largely related to product assortment and logistics and fulfillment upgrades. We also continue to expect to generate approximately $600 million of free cash flow in 2026, including a 66 million after tax benefit from the interchange fee litigation settlements recognized in Q1. In the first quarter we redeemed our January 2027 notes of $284 million. And as always, we will take a balanced approach investing to drive long term growth while returning excess cash to shareholders. In closing, while 2026 is an investment year, we’re executing with speed and discipline. We’re confident in our strategy, encouraged by our early progress, and focused on establishing Bath & Body Works Inc as a premier global brand, one that delivers sustained, durable growth. With that, I’ll turn it over to Daniel.
Daniel Heaf (Chief Executive Officer)
Before we take questions, I’d like to take a moment to thank Eva for her contributions to Bath and Body Works. Eva, on behalf of the entire Bath and Body Works team, thank you. You’ve been a steadying force during a pivotal chapter for this company, strengthening our financial foundation, bringing discipline to how we invest, and helping to lay the groundwork for the Consumer first formula. You leave us in a stronger position than you found us, and you do so with our deep gratitude and very best wishes for what comes next. We have initiated a comprehensive search process, supported by a leading executive search firm, to identify our next Chief Financial Officer. In the meantime, Tom Javic will step in as interim Chief Financial Officer, effective upon Eva’s departure. Tom brings deep experience with more than 16 years at Bath and Body Works and 25 years with L Brand, including serving as EVP of Brand Finance. We’re confident he will provide strong continuity and leadership during this transition. With that, we’ll open the call for questions.
OPERATOR
Thank you. As a reminder, if you’d like to ask a question, please press Star one on your telephone keypad. You may press Star two if you’d like to remove your question from the queue to allow for as many questions as possible. We ask that you each keep to one question and one follow up. Thank you. Our first question comes from the line of Ike Boruchow with Wells Fargo. Please proceed with your question.
Ike Boruchow (Equity Analyst at Wells Fargo)
Hey, good morning, everyone. Daniel, I think my first one’s for you just on the body care down mid teens in the first quarter. Seems like it was the biggest drag clearly on the results. Just can you elaborate just a little bit more on what you’ve done to address that category issue? And I’m mainly trying to get at is that problem that they kind of surfaced in the first quarter behind you at this point. How are you expecting body care to trend from here?
Daniel Heaf (Chief Executive Officer)
Good morning, Iken. Thanks for the question. Let me start by taking you back to the diagnosis that we gave in November when we said that body care is the most competitive category and that the offering, our offering had not kept pace with the consumer that is why as part of the Consumer First Formula, we have prioritized investment in body care and we are expecting stronger, more relevant innovation to begin showing up in the back half. As I said in my prepared remarks, I’m excited about the body care innovation that we have coming now within the quarter. The underperformance which you noted was driven by two factors. Firstly, we planned Disney Princesses 2 to be to be bigger in accessories this year. That is where we left demand on the table last year and the results we delivered show that that was the right thing to do. Also, in everyday luxury, we have not managed the franchise as effectively as we should have and we pulled back too substantially on that assortment. We recognized that very quickly and we’ve already taken action. As of this month, we are back in stock with 10 fragrances, including the top sellers from last spring in both Fine Fragrance Mist and Body Cream. And we are already seeing improved results and we expect Q2 to be meaningfully better in Body care. Importantly though, and this brings us back to the sort of the more substantial strategic point I think is we now have a clear franchise architecture across the business, including defined key growth franchises and fragrance icons. Everyday Luxuries has a very important role in that portfolio and we expect it to deliver durable growth over time. We are rebuilding the core assortment, increasing fragrance loads and expanding into newer forms. And all of that newness in Everyday Luxuries will be delivered in the back half of the year. So in summary, while Body Care underperformance was absolutely not where we want it to be, we understood the drivers, we took action and we remain very confident in the category’s long term potential for us.
Ike Boruchow (Equity Analyst at Wells Fargo)
Super helpful, Daniel, thank you. And then just to follow up, I guess, bigger picture, you’re now 1 or 2/4 in post the reset in the third quarter. Is there any view on of a need to push out your revenue inflection story maybe into early 2027 for any reason? Or do you kind of just view things as largely on track and things are progressing the way you had hoped?
Daniel Heaf (Chief Executive Officer)
I think you said it brilliantly, ike. You know, Q1 was absolutely consistent with where we expected to be at this stage of our transformation. As we noted in the prepared remarks, the underlying business remains pressured and we’re not calling it an inflection. It was a beat, but nowhere near the potential of this brand. And what gives us confidence, the actions that we’re taking are starting to show up in the growth indicators that we told you to look out for last quarter. So particularly stronger pricing Power behind our innovation and the expanded reach through new distribution channels is bringing new consumers to the brand. As I said, I don’t think the examples that we gave on today’s call, particularly moisturizing hand soap and white bar neutrals, are meaningful enough yet to show up in our full financials. But that is the job that we are all focused on in the back half. It is how do we put it together to deliver the scale and bring the company back to growth as soon as possible. That is what every team in this company wants and that is where we are focused.
OPERATOR
Thank you. Our next question comes from the line of Matthew Boss with JP Morgan. Please proceed with your question.
Matthew Boss (Equity Analyst at JP Morgan)
Great, thanks. So Daniel, you launched on Amazon during the first quarter. What are your biggest learnings to date? Have there been any surprises? And how are you thinking about balancing marketplace expansion while protecting traffic and productivity within your owned channels of distribution?
Daniel Heaf (Chief Executive Officer)
Thanks Matt. Good morning. I think it’s fair to say that we are very pleased with our Amazon performance since launching in February. Totally new capability and strategy for this company. It is still early but we’re seeing strong double digit week over week growth and that is absolutely in line with the expectations that we gave. More importantly than the growth though, I think that Amazon is proving to be an effective climate consumer acquisition channel. That was one of the green-shoot indicators we talked to on our last earnings call and we are bringing in a higher mix of new to brand consumers who are skewing younger and more affluent and who value Amazon’s speed, convenience and ease of discovery. We’re also seeing AUR on this channel up higher. So this reinforces the strategic point of view that Amazon can be a controlled curated complement to our own channel and absolutely not a substitute for them. As we said from the outset and is absolutely still the case, our own channels will always be and always offer the broadest assortment. And just by a way of reference we have about 94 unique SKUs live on Amazon today. That’s about 7% of our active in store assortment. So there’s so much more breadth and depth in our own channels than in third party marketplaces. And then maybe I’ll add just a couple more points that I think are interesting things that we have learned. Firstly, we are as part of this in the process of cleaning up the marketplace and we put in place quantity limits in both our digital channel and stores channel and absolutely that is being effective and we are cleaning up the marketplace. And secondly, perhaps more future focused we are finding that the product information that we’re putting up on Amazon is really helping to improve our recommendations in generative search in platforms like ChatGPT and Claude. So again, something that we are watching and perhaps an unexpected benefit of the expansion onto Amazon and maybe just a
Matthew Boss (Equity Analyst at JP Morgan)
follow up for Eva. Could you elaborate on the product investments that are pressuring merchandise margin this year and just what you’ve contemplated, whether it relates to oil from a headwind or markdowns over the balance of the year?
Eva Barrato (Chief Financial Officer)
Sure. Thanks for the question, Matt. Overall, as you look at gross margins for the year, we reiterated our prior gross margin guidance of 42.4%. The merch margin deleverage, it’s about 40 basis points. Think about that as largely product investment, tariffs and raw material inflation kind of together roughly flat. Between the two of those, we have contemplated inflationary pressures in crude oil, which is a new headwind that we’ve been able to offset with some incremental cost reductions. So largely it’s a little bit of pressure on that crude oil as well as the product investments net of our fuel for growth initiatives B&O deleverages, obviously about 90 basis points which is really driven by by the sales decline. And I would just remind you that there are no tariff refunds included in our guidance and there’s a lot of unknowns out there and we expect to know more about that in about three months from now.
OPERATOR
Thank you. Our next question comes from the line of Simeon Siegel with Guggenheim Securities. Please proceed with your questions.
Simeon Siegel (Equity Analyst at Guggenheim Securities)
Thanks. Hey everyone. Morning Eva. It’s been really nice working with you. Wish you the best on your next chapter.
Daniel Heaf (Chief Executive Officer)
You bet. Daniel, you’ve been with the company for about a year now, or a year now. How has your view of the opportunity evolved since you joined? I guess just could you speak to your optimism in the opportunity now versus maybe when you began any big learnings about the business and the path forward? And then if you were to take a step back and just diagnose the sales declines in recent years, how would you characterize them between price versus units and within units? How would you think about whether you’re losing customers versus you’re lowering their frequency of shop? Thanks, Gus. Morning, Simeon. Thanks for the question. Let me start by saying I’ve loved every minute of my first 12 months here with the Bath & Body Works Inc team. I would say that my conviction in the opportunity 12 months in is stronger. But I’d also say that my understanding of what it will take is sharper. As I said, I think almost on day one when I did my first earnings call, Bath & Body Works Inc has extraordinary assets. It’s a deeply loved brand. It has leadership in growing and attractive categories, large, profitable and convenient store footprint, highly engaged customer base. And I’d say that the learning has been the work required to reach our full potential is significant. We need to restart our innovation engine in the hero categories. We need to make the brand more relevant and modernize demand creation. We need to improve digital, we need to expand access and of course we need to do that simultaneously while operating faster and more efficiently. And that is exactly what the plan we put in place as a team, the Consumer First Formula is designed to do and it is the plan we’re driving. I would say that the diagnosis that I gave a little bit to the second point of your question before I maybe hand to Eva, it hasn’t changed, if anything, in the last six months since we gave the diagnosis. I think that the evidence reinforces it. When we deliver stronger product, sharper storytelling and better marketplace execution and we do those things simultaneously, the consumer responds. The proof points that we talked about on today’s call, they’re still early, it’s still too small to show up in the financials, but they support the logic of the strategy. So net net one year in, I have a clearer view of the work, the right leadership team and a growing conviction that we’re absolutely on the right path.
Eva Barrato (Chief Financial Officer)
Daniel, I’ll take the second part of the question around the sales performance over the last several years and I’ll think this year into last year. Simeon, as I make these comments. Overall our existing loyal customers have have been strong. We’ve seen more frequency, greater spend with that loyal customer base. As Daniel pointed out several quarters ago, we need to be more relevant with that new younger customer. Where our focus is with the Consumer first formula on the price in units given where the brand is, we really have not been able to take AURs up. They’ve been flat to down low single digits each quarter. And as you look forward, as you bring product, brand, marketplace together and have the right innovation, we know this brand can grow AUR as well as units and that’s what we’re looking to drive here.
OPERATOR
Thank you. Our next question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question. Thank you.
Daniel Heaf (Chief Executive Officer)
Good morning. When you were answering Ike’s question, you spoke about the building benefits throughout the year of the Consumer First Formula. Do you expect a return to positive sales growth in the second half? And if not, why not? I mean, I’ll sort of go back to the comments I made earlier. I think we’re exactly where we expect to be. Again, the underlying trends of the business remain pressured and we’re not calling it an inflection. We do see the positive proof points in the strategy, particularly around white bar neutrals, moisturizing hand soap. And I think we didn’t talk about it on the call, but the iconization of Japanese cherry blossom is also a good proof point. What we need to do in the back half as the innovation comes to market is making sure that we’re putting all the pieces together, that the foundation that we’ve built is being executed in the marketplace correctly. And we expect the impact to become more visible to the consumer in the back half and more visible in our financials. So every team at Bath and Body Work wants to win and is laser focused on bringing the company back to delivering sustainable and healthy growth as soon as.
Eva Barrato (Chief Financial Officer)
Yeah, Lorraine. And I’ll just add one thing, Daniel, if I could. Right. We’re in the early stages of this transformation and as we provided our guidance three months ago and reaffirmed that today, we believe we’ve planned the business prudently in line with our current trends. And as you think about the innovation, we’re also being very surgical how we approach that and, and the impact so we can build on the things that win in the marketplace and drive durable growth.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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