Bath & Body Works, Inc. (NYSE:BBWI) stock surged on Wednesday after the retailer reported first-quarter results above guidance and analyst estimates while reaffirming its full-year outlook.
Adjusted first-quarter EPS came in at 32 cents, topping the 29-cent consensus estimate, while revenue of $1.378 billion beat expectations of $1.362 billion. Net sales fell 3% year over year.
• Bath & Body Works shares are powering higher. Why is BBWI stock up today?
Profitability And One-Time Items
GAAP EPS rose to 90 cents from 49 cents last year, while adjusted EPS declined to 32 cents from 49 cents. Net income increased to $183 million from $105 million, while adjusted net income fell to $65 million.
Results included an $88 million pre-tax gain tied to payment card interchange fee litigation settlements, an $8 million debt extinguishment loss, $8 million in Consumer First Formula transformation costs, and a $62 million tax benefit.
“Our first-quarter results exceeded guidance, but remain below the standard our brand is capable of delivering,” said CEO Daniel Heaf.
“We believe that the foundation we are building will drive improved performance over time, with the impact expected to build through the balance of 2026 and more meaningfully into 2027, as we position the company to return to sustainable, durable growth.”
Segment Trends and Balance Sheet
U.S. and Canada store sales declined 4.3% to $1.062 billion, while direct sales fell 1.5% to $246 million. International and other revenue increased 9% to $70 million.
Operating cash flow rose to $244 million from $188 million a year earlier. Capital expenditures totaled $49 million, while cash and equivalents ended the quarter at $820 million.
Inventory declined to $782 million from $869 million.
Bath & Body Works ended the quarter with 1,923 company-operated stores and 579 international partner-operated stores.
Guidance And CFO Transition
Bath & Body Works reaffirmed full-year 2026 GAAP EPS guidance of $3 to $3.25 versus the $2.61 analyst estimate and adjusted EPS guidance of $2.40 to $2.65 versus the $2.64 estimate.
The company maintained its forecast for sales to decline 4.5% to 2.5%, implying revenue of about $6.963 billion to $7.109 billion, compared with the $7.081 billion analyst estimate.
For the second quarter, the company forecast GAAP EPS of 20 cents to 25 cents, versus the 20 cents analyst estimate, and projected sales of $1.472 billion to $1.503 billion, compared with the $1.488 billion estimate.
CFO Eva Boratto will step down on June 12, with Tom Javitch appointed interim CFO during the search for a permanent replacement.
Conference Call Highlights
Executives said body care trends remained “pressured” after the company “pulled back too substantially” on its Everyday Luxuries assortment, prompting a rapid inventory rebuild.
Management said trends are already improving after restocking top-selling fragrances, though the company stressed it remains in the “early stages” of a multiyear turnaround.
Bath & Body Works also highlighted strong early momentum on Amazon, with management describing “strong double-digit week-over-week” sales growth and increasing traction among younger, more affluent consumers.
Boratto said elevated crude oil prices created a “new headwind” partially offset by cost reductions, while management expects product and marketing investments to increase in the second half.
BBWI Price Action: Bath & Body Works shares were up 11.84% at $19.84 at the time of publication on Wednesday.
Photo by Kenishirotie via Shutterstock
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