Bath and Body Works (NYSE:BBWI) Exceeds Q2 CY2026 Expectations, but Q3 Guidance Disappoints

Personal care and home fragrance retailer Bath & Body Works (NYSE:BBWI) reported Q2 CY2026 results topping the market’s revenue expectations, but sales fell by 2.3% year on year to $1.51 billion. Its non-GAAP profit of $0.62 per share was significantly above analysts’ consensus estimates.

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Daniel Heaf, chief executive officer of Bath & Body Works, commented, “Our second-quarter results exceeded our sales and earnings per share guidance. Underlying business trends remain pressured, but we are seeing further evidence that elements of the Consumer First Formula are beginning to work. We delivered sequential improvement in Body Care, stronger AUR on new product innovation, improved brand discoverability, and continued momentum across our marketplace partnerships.”

Company Overview

Spun off from L Brands in 2020, Bath & Body Works (NYSE:BBWI) is a personal care and home fragrance retailer where consumers can find specialty shower gels, scented candles for the home, and lotions.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $7.21 billion in revenue over the past 12 months, Bath and Body Works is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.

As you can see below, Bath and Body Works’s demand was weak over the last three years. Its sales fell by 1.1% annually despite opening new stores. This implies its underperformance was driven by lower sales at existing, established locations.

This quarter, Bath and Body Works’s revenue fell by 2.3% year on year to $1.51 billion but beat Wall Street’s estimates by 1.2%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection doesn’t excite us and indicates its newer products will not catalyze better top-line performance yet.

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Store Performance

Number of Stores

The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.

Bath and Body Works operated 2,533 locations in the latest quarter. It has opened new stores quickly over the last two years, averaging 3.5% annual growth, faster than the broader consumer retail sector.

When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.

Same-Store Sales

A company’s store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).

Bath and Body Works’s demand has been shrinking over the last two years as its same-store sales have averaged 1.7% annual declines. This performance is concerning – it shows Bath and Body Works artificially boosts its revenue by building new stores. We’d like to see a company’s same-store sales rise before it takes on the costly, capital-intensive endeavor of expanding its store base.

Note that Bath and Body Works reports its same-store sales intermittently, so some data points are missing in the chart below.

Key Takeaways from Bath and Body Works’s Q2 Results

It was good to see Bath and Body Works beat analysts’ EPS expectations this quarter. We were also excited its gross margin outperformed Wall Street’s estimates by a wide margin. On the other hand, its EPS guidance for next quarter missed. Overall, this print was mixed. The market seemed to be hoping for more, and the stock traded down 3.3% to $17.01 immediately after reporting.

So do we think Bath and Body Works is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).