Bath & Body Works Inc (NYSE:BBWI) on Wednesday reported second quarter fiscal 2026 results above expectations, while the company also raised its full-year adjusted earnings outlook.
The retailer reported net sales of $1.51 billion for the quarter ended August 1, down 2.3% from $1.55 billion a year earlier and slightly above analyst expectations of approximately $1.50 billion.
Adjusted earnings per diluted share were $0.62, compared with the $0.24 consensus estimate. On a GAAP basis, earnings per diluted share were $0.58, up from $0.30 in the prior-year period.
Net income increased to $118 million from $64 million a year earlier, while operating income rose to $216 million from $157 million.
The results included $9 million in pretax costs related to business transformation activities. Excluding those costs, adjusted net income was $125 million and adjusted operating income was $225 million.
Bath & Body Works also received approximately $80 million in tariff refunds during the quarter. The company noted that excluding the refund benefit, second-quarter adjusted earnings per diluted share would have been $0.31.
The company highlighted growth in direct net sales, marking the first increase in the channel since 2021. Management also pointed to sequential improvement in Body Care, stronger average unit retail prices on new product innovation and continued momentum across marketplace partnerships.
"Our second-quarter results exceeded our sales and earnings per share guidance," Bath & Body Works CEO Daniel Heaf said in the company's earnings release.
"Underlying business trends remain pressured, but we are seeing further evidence that elements of the Consumer First Formula are beginning to work."
For fiscal 2026, Bath & Body Works raised its adjusted earnings per diluted share guidance to $2.60 to $2.80 from its previous range of $2.40 to $2.65. The new outlook is above the $2.65 analyst consensus.
The company narrowed its full-year sales outlook to a decline of 2.5% to 4% from fiscal 2025 sales of $7.29 billion. GAAP earnings per diluted share are expected to range from $3.13 to $3.33, compared with $3.11 in fiscal 2025. The company also expects approximately $650 million in free cash flow and is not assuming any share repurchases in its outlook.
For the third quarter, Bath & Body Works expects sales to decline between 2.5% and 5% from $1.59 billion a year earlier.
Adjusted earnings per diluted share is expected to range from $0.07 to $0.12, compared with $0.35 in the year-ago period. The third quarter adjusted earnings outlook is below the $0.26 analyst consensus.
Following the report, shares of Bath & Body works were down about 1% in early trading.