Inve US ▾
BBBBWI

Bath & Body Works (BBWI) Q1 FY27 earnings call: guidance and Q&A

Earnings call· Apr 2026 (Q1 FY27)· Consumer Discretionary· May 27, 2026

Source: earnings call transcript

Executive summary

Bath & Body Works Q1 FY27 — Transformation Progress Amidst Continued Pressure

Bath & Body Works is executing its multi-year consumer-first formula transformation, with Q1 FY27 results ahead of expectations but still reflecting underlying business pressures. Early proof points in product innovation and expanded distribution channels are emerging, reinforcing confidence in the strategy. The company is focused on rebuilding product superiority, modernizing the brand, and expanding marketplace access to drive sustainable, long-term growth.

Highlights

6

  • Net sales declined 3% and adjusted EPS was $0.32, both ahead of expectations.

  • AUR and SKU productivity for new moisturizing and revitalizing body care formulations were up double digits.

  • White Barn Neutral collection grew approximately 20% in Q2 versus last year and attracted a younger consumer.

  • Amazon business is seeing consistent double-digit week-over-week growth, attracting younger, more affluent consumers with higher AURs.

  • International retail sales were up double digits in the quarter, representing a compelling opportunity.

  • Inventory ended the quarter down 10% to prior year, indicating confidence in levels going into Q2.

Concerns

6

  • Net sales declined 3.2% versus last year, and adjusted EPS of $0.32 remains below the company's expected standard.

  • Underlying business trends remain pressured and largely consistent with the past several quarters.

  • Body Care declined mid-teens, below expectations, primarily due to everyday luxury assortment changes and a mix shift towards accessories in Disney Princesses 2 collaboration.

  • Adjusted gross profit rate was 42.7%, a decline of 270 basis points, driven by tariffs, inflation, crude oil impact (130 bps), and category mix.

  • Adjusted SG&A rate increased 100 basis points versus last year due to sales decline, investments, inflation, and merit impacts.

  • International net sales are expected to be down low- to mid-single digits in Q2, primarily related to a decline in shipped product sales to the Middle East partner due to ongoing conflict.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Net Sales
down 4.5% to down 2.5%
high materiality
High
Full-year 2026 Adjusted Earnings Per Share
$2.40 to $2.65
high materiality
High
Q2 Net Sales
down 5% to down 3%
medium materiality
High
Q2 International Net Sales
down low- to mid-single digits
medium materiality
Medium
Q2 International Retail Sales
grow low double digits
medium materiality
High
Q2 Gross Profit Rate
approximately 40%
medium materiality
High
Q2 SG&A Rate
approximately 31.8%
medium materiality
High
Q2 Adjusted Earnings Per Diluted Share
$0.20 to $0.25
high materiality
High
Full-year 2026 Capital Expenditures
approximately $270 million
medium materiality
High
Full-year 2026 Free Cash Flow
approximately $600 million
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Body Care
Underperformed the broader business and expectations, driven by everyday luxury assortment changes and a mix shift towards accessories in Disney Princesses 2 collaboration. Underlying trends remain pressured, but actions taken to refocus on core and align with consumer expectations.
—declined mid-teens——
Home Fragrance
Candles performed slightly above expectations, supported by strategic pricing and solid results in the neutrals line, partially offset by softness in Wallflowers.
—declined low single digits——
Soaps and Sanitizers
Continued strength in sanitizers and solid performance in soaps, driven by new moisturizing and revitalizing formulas.
—grew low single digits——
U.S. and Canadian Stores
Net sales decreased compared to the prior year. Off-mall locations performed better than mall stores.
$1.1 billiondecrease of 4.3%——
Direct Channel
Benefited from a reduction to the free ship threshold to $50. Normalized for this change, digital and stores performed comparably.
$246 milliondecrease of 1.5%——
International and Other
Inclusive of domestic third-party wholesale revenues. International net sales were up 5%, in line with expectations.
$70 millionup 9%——

BBWI operating KPIs by quarter

BBWI operating KPIs stated on its earnings calls, by fiscal quarter
KPI Jan 2026 Q4 FY26This call Apr 2026 Q1 FY27 Jul 2026 Q2 FY27Change vs prior quarter
New stores opened North America
21 In the quarter, we opened 21 new North American stores, all off-mall and closed 28 stores, primarily in malls. Source: earnings call transcript
13 And in the quarter, we opened 13 new North American stores, all off-mall; and closed 17 stores, primarily in malls. Source: earnings call transcript
—-38.1%
Stores closed North America
28 In the quarter, we opened 21 new North American stores, all off-mall and closed 28 stores, primarily in malls. Source: earnings call transcript
17 And in the quarter, we opened 13 new North American stores, all off-mall; and closed 17 stores, primarily in malls. Source: earnings call transcript
—-39.3%
New stores opened International
36 International partners opened 36 stores and closed 7 stores in Q4 with 44 net new stores in the year. Source: earnings call transcript
8 International partners opened 8 stores and closed 2 stores in the first quarter. Source: earnings call transcript
17 International partners opened 17 stores. Source: earnings call transcript
+112.5%
Stores closed International
7 International partners opened 36 stores and closed 7 stores in Q4 with 44 net new stores in the year. Source: earnings call transcript
2 International partners opened 8 stores and closed 2 stores in the first quarter. Source: earnings call transcript
—-71.4%
Stores International
573 We ended the year with 573 international locations. Source: earnings call transcript
579 We ended the quarter with 579 international locations. Source: earnings call transcript
596 We ended the quarter with 1,937 North American company-owned stores with approximately 60% of our fleet in off-mall locations and 596 international locations. Source: earnings call transcript
+2.9%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
New Moisturizing and Revitalizing Body Carelaunch
Disney Princesses 2 Collaborationupdate
Vera Bradley Collaborationupdate
Hero Categories Upgradesroadmap
Website Relaunchroadmap

Risks & headwinds

Underlying business trends remain pressured Ongoing

Net sales declined 3.2% YoY; adjusted EPS $0.32, below standard.

Mitigation:Execution of multi-year consumer-first formula transformation, focusing on product, brand, and marketplace.

Body Care underperformance Q1 FY27, expected improvement in Q2

Declined mid-teens in Q1.

Mitigation:Restocked 10 everyday luxury fragrances; bold innovation planned for H2 FY27; refocusing on core and aligning product with evolving consumer expectations.

Tariffs, inflation, and crude oil impact on merchandise margin Ongoing for FY26

Approximately 130 basis points impact on merchandise margin rate decline of 210 bps in Q1.

Mitigation:Fuel for Growth initiatives, incremental cost reductions; guidance assumes roughly neutral year-over-year impact from tariffs and inflation, but elevated energy prices remain a headwind.

Sales decline leading to SG&A deleverage Ongoing

Adjusted SG&A rate increased 100 bps YoY in Q1.

Mitigation:Fuel for Growth savings partially offsetting investments and inflation.

International net sales decline due to Middle East conflict Q2 FY27

Expected down low- to mid-single digits in Q2.

Mitigation:Focus on long-term asset-light franchise growth outside North America; international retail sales expected to grow low double digits.

Consumer value-seeking behavior Ongoing

Mix-adjusted AUR flat in Q1.

Mitigation:Rebuilding consumer proposition through product superiority, clearer benefits, and compelling reasons to buy; focusing on innovation to drive AUR increases.

What to watch in Q2 FY27

Body Care Performance

Q2 FY27
Current Declined mid-teens in Q1
Target Meaningfully better in Q2

Why it matters

Body Care is a key category, and its underperformance was a significant drag on Q1 results. Recovery is crucial for overall sales improvement.

we expect Q2 to be meaningfully better in body care.

Find out whether BBWI delivers this. Inve re-checks your case every morning.

Q&A highlights

Body Care declined mid-teens in Q1, representing a significant drag. What actions have been taken to address this, and how is Body Care expected to trend going forward?

Daniel Heaf explained the underperformance was due to planned accessory mix in Disney collaboration and pulling back too much on everyday luxury assortment. They quickly restocked 10 everyday luxury fragrances and expect Q2 to be meaningfully better. He reiterated the strategic focus on innovation in Body Care for the back half of the year, emphasizing the category's long-term potential.

“As of this month, we are back in stock with 10 fragrances, including the top sellers from last spring in both Fine Fragrance Smith and Body And we are already seeing improved results, and we expect Q2 to be meaningfully better in body care.”

asked by Irwin Boruchow · answered by Daniel Heaf

2 min read 5 chapters

Detailed narrative

Consumer-First Formula Progress

The company's multi-year consumer-first formula strategy, introduced in November, aims to return Bath & Body Works to sustainable growth by focusing on product, brand, and marketplace. Q1 performance, while pressured, showed early evidence that the strategy is working, with impacts expected to build through the year and become more visible in financials by 2027. Management expressed increased conviction in the opportunity and a sharper understanding of the work required for transformation.

Product Innovation and Body Care Strategy

Restarting the innovation engine in Hero categories is foundational. New moisturizing and revitalizing products launched in Q1 saw double-digit AUR and SKU productivity increases, demonstrating consumer response to stronger product offerings. Body Care underperformed mid-teens due to everyday luxury assortment changes and a mix shift to accessories. The company quickly restocked 10 everyday luxury fragrances and expects meaningful improvement in Q2, with bold innovation planned for the back half of the year.

Brand Modernization and Digital Acceleration

Efforts to reignite the brand include sharpening positioning, elevating creative expression, and leveraging influencers to build relevance. The White Barn Neutral collection grew approximately 20% in Q2 and attracted younger consumers through this approach. The company is also strengthening its digital presence, with a mobile-first website relaunch planned for later this year, aiming for faster checkout and improved storytelling. Early signs show a 10% improvement in conversion among new digital consumers.

Marketplace Expansion and Store Experience

Bath & Body Works is focused on meeting consumers across all channels. Its global fleet of approximately 2,500 stores remains a competitive advantage, with updates to store navigation rolling out in July to simplify the in-store experience. The Amazon business, launched in February, is seeing consistent double-digit week-over-week growth, attracting younger, more affluent consumers with higher AURs. International retail sales were up double digits, despite near-term pressure in the Middle East, highlighting a long runway for asset-light franchise growth.

Operational Efficiency and Financial Discipline

The multi-year Fuel for Growth program is simplifying the business and reallocating resources to innovation, brand relevance, and digital acceleration. This helps fund investments while maintaining a strong financial foundation. The company expects to invest $270 million in capital expenditures and generate $600 million in free cash flow in 2026. Eva Boratto's departure as CFO was announced, with an interim CFO appointed and a search underway for a successor to help execute the next phase of transformation.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.