Bath & Body Works nearly doubled its quarterly profit and raised its earnings forecast for the year, but the numbers reveal a divided picture: the retailer is making more money while customers are spending less.
The company earned $118 million during its fiscal second quarter, up from $64 million during the same period last year. Earnings increased to 58 cents a share from 30 cents, while adjusted earnings reached 62 cents a share—far exceeding the 24 cents analysts expected.
Sales, however, declined 2.3% to $1.51 billion. Weak traffic at physical stores continued to pressure the business as consumers remained cautious about discretionary purchases such as candles, fragrances, soaps and body-care products.
A substantial tariff refund helped produce the sharp increase in earnings. Bath & Body Works received approximately $80 million in tariff refunds during the quarter. Without that benefit, adjusted earnings would have been approximately 31 cents a share—still ahead of analysts’ expectations, but only half the reported amount.
Operating income rose to $216 million from $157 million a year earlier, showing that the company also benefited from tighter cost controls and efforts to simplify its operations.
Bath & Body Works raised its full-year adjusted earnings forecast to between $2.60 and $2.80 a share, up from its previous projection of $2.40 to $2.65. Reported earnings are now expected to reach $3.13 to $3.33 a share, compared with the earlier range of $3 to $3.25.
The company also increased its expected free cash flow to approximately $650 million from $600 million.
The improved profit forecast does not mean Bath & Body Works expects sales to return to growth this year. The retailer now projects annual revenue will decline between 2.5% and 4%. That is only a modest improvement from its previous forecast for a decline of between 2.5% and 4.5%.
The company is working to become less dependent on shoppers visiting its traditional stores. Its products are now available through Amazon and Ulta Beauty, in addition to its own website, more than 1,900 stores in the United States and Canada and over 550 international locations.
Digital sales grew during the quarter, providing one of the clearest signs of progress. Bath & Body Works has been improving its online shopping experience, refreshing its brand, introducing new products and expanding distribution to reach customers who may no longer visit malls as frequently.
Chief Executive Daniel Heaf said the quarterly results exceeded the company’s sales and earnings expectations and showed progress in its broader transformation. The strategy is intended to turn Bath & Body Works from a store-centered specialty retailer into a brand that can sell through multiple physical and digital channels.
The immediate outlook remains difficult. For the third quarter, the company expects sales to decline between 2.5% and 5%. Adjusted earnings are projected at only 7 cents to 12 cents a share, down sharply from 35 cents during the comparable period last year.
That forecast matters because it shows the turnaround is not yet complete. Bath & Body Works has improved profitability, generated more cash and benefited from tariff refunds, but it has not solved its central challenge: attracting more shoppers and restoring consistent sales growth.
The fall and holiday seasons will provide the company’s most important test. Candles, fragrances and gift sets traditionally become stronger sellers during that period. If customer demand improves, Bath & Body Works could begin turning its financial progress into a broader retail recovery. If sales remain weak, the company’s higher earnings will continue to depend heavily on cost controls and benefits that may not be repeated.
JBizNews Desk | Columbus, Ohio
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