Bath & Body Works Q1 2026 Results Beat Estimates

Bath & Body Works reported first-quarter 2026 results on May 27 that topped the company’s guidance on adjusted earnings per share, while management said underlying sales remain pressured. The retailer reaffirmed its full-year 2026 outlook and announced a CFO departure.

Quarter Results and Guidance

Bath & Body Works, Inc. (NYSE: BBWI) reported first-quarter net sales of $1.4 billion, down 3.0% year over year. Adjusted diluted earnings per share (EPS) were $0.32, exceeding the company’s prior guidance range of $0.24 to $0.30 and the consensus estimate of about $0.29. GAAP EPS was $0.90, compared with $0.49 in the year-earlier quarter.

The company reaffirmed full-year 2026 guidance, projecting net sales to decline between 4.5% and 2.5% from fiscal 2025’s $7.29 billion. It expects GAAP EPS of $3.00 to $3.25 and adjusted EPS of $2.40 to $2.65. The company reiterated plans for roughly $270 million in capital expenditures and a free-cash-flow target near $600 million, which includes a $66 million after-tax litigation settlement benefit. The outlook excludes the effects of share repurchases or potential tariff refunds and assumes elevated energy prices with tariffs and inflationary pressures roughly neutral year over year.

On the earnings call, management set second-quarter guidance that implies continued top-line contraction, with net sales expected to decline 5.0% to 3.0% versus the year-ago quarter and adjusted EPS in the range of $0.20 to $0.25. International shipped product sales to Middle Eastern partners are expected to weigh on results, while on-the-ground international retail is projected to grow in the low double digits.

Strategy and Management Update

The company is executing a multi-year turnaround called the “Consumer First Formula.” Management described the quarter as showing early progress but acknowledged ongoing pressure on underlying sales and traffic.

U.S. and Canadian stores generated roughly $1.1 billion in sales, direct commerce produced $246 million, down 1.5% year over year, and international and other sales reached about $70 million, up approximately 9.0%. The body-care category was the weakest segment, declining in the mid-teens percentage range.

Management highlighted margin pressures: adjusted gross margin fell to 42.7%, down 270 basis points from the prior year, and adjusted merchandise margin compressed by 210 basis points due to tariffs, inflation including crude-oil-linked costs, and category mix. Adjusted operating income was $151 million, about 11.0% of net sales. A Form 8-K filed after the release showed GAAP operating income of $231 million versus $159 million a year earlier and net income of $183 million compared with $105 million, with legal and tax items boosting GAAP results.

Inventory levels ended the quarter down roughly 10% year over year, and management expressed confidence heading into the second quarter. The company redeemed $284 million of notes due January 2027 during the quarter and returned $40 million to shareholders through dividends.

The press release announced that CFO Eva Boratto will step down effective June 12, 2026. An interim CFO has been appointed, and the company has launched an external search for a permanent replacement.

That guidance and the second-quarter outlook indicate continued top-line contraction and margin pressure, underscoring that the Consumer First Formula remains a multi-year turnaround requiring inventory control, cost discipline, and selective international growth.

“Bath & Body Works… reported first quarter 2026 results, delivering net sales and adjusted earnings per diluted share results above guidance and progress against the Consumer First Formula,” the company said in its press release.