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Bath & Body Works Q2 2025 Earnings: Sales Growth
August 28, 2025
Executive Summary
Bath & Body Works, Inc. (NYSE:BBWI) reported its Q2 2025 earnings on August 28, 2025, showcasing resilience in personal care trends. The company achieved ✔ $1.549 billion revenue, meeting estimates of $1.55 billion, and ✔ $0.37 adjusted EPS, aligning with guidance but missing consensus estimates of $0.38 by $0.01. A multi-year Disney partnership and a 39 million-member loyalty program bolstered performance.
However, ✘ reported EPS of $0.30 fell from $0.68 year-over-year due to leadership transition costs under new CEO Daniel Heaf, and direct sales declined 10% to $267 million, reflecting digital challenges.
Stock analysis highlights Bath & Body Works’ personal care trends, tempered by tariff impacts and digital weaknesses.
Summary of Beats, Misses, and Forward Guidance
| Metric | Actual | Expectation | Outcome |
|---|---|---|---|
| Q2 Revenue | $1.549 billion | $1.55 billion | ✔ Met |
| Q2 Adjusted EPS | $0.37 | $0.38 | ✘ Missed |
| Q2 Reported EPS | $0.30 | $0.68 (YoY) | ✘ Miss |
| Q2 Comparable Sales | 1.3% | 1.1% | ✔ Beat |
| FY2025 Adjusted EPS Outlook | $3.35–$3.60 | $3.25–$3.60 | ✔ Raised |
1. Q2 2025 Financial Performance
Bath & Body Works delivered solid Q2 2025 earnings despite challenges:
- Total Revenue: ✔ $1.549 billion, up 1.5% year-over-year from $1.526 billion, meeting estimates of $1.55 billion.
- Adjusted EPS: ✘ $0.37, flat year-over-year, meeting company guidance ($0.33–$0.38) but missing consensus estimates of $0.38 by $0.01.
- Reported EPS: ✘ $0.30, down from $0.68 year-over-year, impacted by leadership transition costs under new CEO Daniel Heaf.
- Comparable Sales: ✔ 1.3% growth, beating estimates of 1.1%, driven by strong store performance.
- U.S. and Canada Store Sales: Up 4.9% to $1.196 billion, reflecting robust in-store traffic and conversion rates.
- Direct Sales: Down 10% to $267 million, highlighting challenges in digital channel engagement and conversion.
2. Growth Drivers for Personal Care Trends
Bath & Body Works’ personal care trends are driven by strategic initiatives:
- Loyalty Program: 39 million active members, driving over 80% of U.S. sales and increasing customer retention.
- Product Innovation: Multi-year Disney partnership and new product collaborations boosted sales, appealing to diverse consumer segments.
- International Expansion: 537 franchised stores globally, with 14 new openings in Q2, capturing international demand.
- Digital Engagement: New app launch planned for September 2025 and mobile web improvements in October 2025 to address 10% digital sales decline and enhance personalized marketing.
Loyalty program and Disney partnership fuel Bath & Body Works’ personal care trends success.
3. Store Optimization and Capital Allocation
Bath & Body Works optimized its footprint and strengthened financial discipline:
- Store Portfolio: 1,904 U.S. and Canada stores, with 20 new off-mall stores opened and 16 mall-based stores closed in Q2, aligning with retail trends.
- Share Repurchases: Increased to $400 million from $300 million, reflecting confidence in long-term value.
- Capital Expenditures: Planned at $250–$270 million for FY2025 to support store optimization and digital investments.
- Free Cash Flow: Projected at $750–$850 million, supporting financial flexibility.
Strategic store optimization and robust capital allocation enhance Bath & Body Works’ personal care trends.
4. Valuation and Market Reaction
Bath & Body Works’ stock faced pressure post-earnings:
- Market Reaction: Shares fell ✘ 6.4% in premarket trading, closing at $29.87, driven by the EPS miss and direct sales decline.
- Valuation: Forward P/E of ~10x, attractive for value investors, though tempered by negative equity.
- Market Cap: Approximately $6.6 billion, reflecting Bath & Body Works’ position in the personal care market.
5. Tariff Impacts and Challenges
Bath & Body Works faces challenges from tariff impacts and other headwinds:
- Tariff Costs: ✘ $85 million annual impact, with $40 million in Q3, mitigated by strategic sourcing and operational efficiencies.
- Direct Sales Decline: ✘ 10% drop in digital sales to $267 million, reflecting challenges in online engagement and competition from omnichannel rivals.
- Consumer Engagement: ✘ Insufficient engagement with younger consumers, risking market share in a digitally savvy demographic.
6. FY2025 Forward Guidance
Bath & Body Works’ FY2025 outlook reflects confidence in growth:
- Adjusted EPS: Raised to ✔ $3.35–$3.60 from $3.25–$3.60, compared to $3.29 in FY2024.
- Net Sales: Narrowed to 1.5%–2.7% growth from 1%–3%, compared to $7.307 billion in FY2024.
- Q3 2025 Sales: Forecasted at 1%–3% growth, with EPS of $0.37–$0.45, compared to $0.49 in Q3 2024.
- Gross Margin: Expected at ~44%, despite tariff pressures, supported by cost control measures.
Bath & Body Works’ guidance reflects personal care trends amid tariff and digital challenges.
7. Competitive Landscape for Stock Analysis
Bath & Body Works operates in a competitive personal care environment:
- Premium Competitors: ✘ Ulta Beauty and Sephora challenge with stronger omnichannel and sustainability strategies.
- Mass-Market Rivals: ✘ Sally Beauty competes with affordable offerings, pressuring pricing and market share.
- Advantage: Loyalty program strength drives retention and sales in the U.S. market.
8. Risks and Challenges for Investors
Key risks impacting Bath & Body Works’ performance include:
- Tariff Impacts: ✘ Margin pressure from $85 million annual costs could challenge profitability.
- Direct Sales Weakness: ✘ 10% digital sales decline risks losing online market share to competitors.
- Consumer Engagement: ✘ Weaker engagement with younger consumers may impact long-term growth.
- Negative Equity: ✘ High leverage raises financial risk, impacting balance sheet stability.
- Operating Costs: ✘ Increased SG&A expenses due to technology and healthcare costs may pressure profitability.
Investors must balance Bath & Body Works’ personal care trends with tariff impacts and digital risks.
9. Industry Impact of Bath & Body Works’ Performance
Bath & Body Works influences personal care trends:
- Loyalty Programs: Strong 39 million-member base sets a benchmark for retention-driven sales in personal care retail.
- Product Innovation: Unique offerings and Disney partnership drive demand for affordable luxury in the personal care sector.
10. Guidance to Investors
Q2 2025 earnings present opportunities with caution:
- Value Investors: ✔ Consider BBWI for its ~10x forward P/E and loyalty program strength, but monitor tariff impacts.
- Risk-Averse Investors: ✔ Diversify with stable retailers like Ulta to mitigate BBWI’s ✘ digital sales risks.
- Opportunistic Investors: ✔ Capitalize on dips, given the raised EPS guidance, but expect ✘ tariff-driven volatility.
- Hedging Strategies: ✔ Use protective puts to manage ✘ stock volatility amid economic uncertainty.
- Digital Performance: ✘ Track direct sales recovery, as digital weakness could impact growth.
- Tariff Monitoring: ✘ Evaluate tariff impacts, as they could significantly affect margins.
Balance Bath & Body Works’ personal care trends with tariff impacts.
11. Conclusion
Bath & Body Works’ Q2 2025 earnings, with ✔ $1.549 billion revenue and ✔ $0.37 adjusted EPS, underscore strength in personal care trends, driven by a 39 million-member loyalty program and a Disney partnership.
✘ Digital sales decline of 10% to $267 million and $85 million tariff impacts highlight challenges, with planned digital investments in September and October 2025 critical for recovery.
Bath & Body Works advances personal care trends, but success depends on overcoming digital and tariff challenges.
12. Disclaimer
This stock analysis is for informational purposes only and does not constitute financial, investment, or legal advice. Investors should conduct due diligence and consult a financial advisor. Bath & Body Works’ stock faces risks from tariff impacts, digital sales weakness, high leverage, and rising operating costs, which could impact results. Past performance is not indicative of future results. Qunatical assumes no liability for losses from actions based on this analysis.
Bath & Body Works’ ✔ sales and EPS performance, bolstered by Disney partnership and loyalty program, are offset by ✘ digital sales decline and tariff impacts, requiring cautious navigation for investors.
