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What Drove BBWI's Raised Guidance After a Strong Q2 Performance?
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Key Takeaways
{\"0\":\"BBWI reported Q2 EPS of 37 cents and $1.5B in sales, both topping management\'s earlier expectations.\",\"1\":\"Full-year EPS forecast lifted to $3.35-$3.60, narrowing sales growth to 1.5-2.7% despite tariff headwinds.\",\"2\":\"Semiannual sale, Summerween launch and stronger traffic supported the company\'s quarterly outperformance.\"}
Bath & Body Works (BBWI - Free Report) delivered a solid second quarter of fiscal 2025, which enabled it to raise the full-year outlook. Net sales reached $1.5 billion, up 1.5% year over year, while adjusted earnings per share were 37 cents. Both metrics were at the high end of management’s prior range. Strong performance during the semiannual sale and the early launch of the “Summerween” collection supported dual-channel traffic and drove this outperformance.
Given this momentum, BBWI revised its full-year adjusted EPS guidance to a range of $3.35-$3.60, lifting the low end from the earlier $3.25-$3.60 forecast. This compares with adjusted EPS of $3.29 reported in fiscal 2024. Net sales growth expectations were also narrowed to 1.5-2.7% compared with the prior 1-3% outlook. The company now anticipates a gross profit rate of about 44%, signaling strong resilience in profitability despite ongoing cost pressures.
Tariffs remain a headwind, with an expected $85 million impact on gross profit for the year, including $40 million concentrated in the third quarter. However, management noted that its vertically integrated, U.S.-based supply chain and ongoing sourcing initiatives position the company well to absorb these pressures and gradually mitigate their effect.
For the third quarter, BBWI expects 1-3% sales growth and EPS of 37-45 cents. Alongside this, the company is advancing investments in digital enhancements, in-store technology and loyalty programs, all aimed at strengthening consumer engagement and improving efficiency.
Finally, the company raised its share repurchase plan to $400 million from $300 million, indicating confidence in cash generation and long-term growth. Management reaffirmed its expectation of consistent 1-3% net sales growth for the second half of the year, confident in the ability to mitigate tariff costs over time while maintaining investment in growth and margin expansion.
Overall, the improved guidance highlights BBWI’s ability to deliver steady sales growth, maintain cost discipline and leverage new initiatives such as the Disney collaboration and expanded alternative distribution channels to drive durable revenue and profit expansion.
BBWI’s Price Performance, Valuation & Estimates
Shares of the company have lost 5.9% in the past three months against the industry’s 18.3% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, Bath & Body Works is trading at a forward 12-month price-to-sales ratio of 0.71X, down from the industry average of 1.96X. BBWI has a Value Score of A.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for this Zacks Rank #3 (Hold) company’s current fiscal-year sales and earnings per share implies year-over-year growth of 2.1% and 4.9%, respectively.
Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GCO’s fiscal 2026 earnings and sales implies growth of 67% and 3%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 28.1%.
The TJX Companies is a leading off-price retailer of apparel and home fashions. It carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year earnings and sales indicates growth of 7.5% and 5.4%, respectively, from the year-ago actuals. TJX delivered a trailing four-quarter average earnings surprise of 5.4%.
Tilly's is a specialty retailer in the action sports industry, selling clothing, shoes and accessories. It has a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for Tilly's current fiscal-year earnings indicates growth of 8.8% from the year-ago actual. TLYS delivered a trailing four-quarter average earnings surprise of 60.7%.
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What Drove BBWI's Raised Guidance After a Strong Q2 Performance?
Key Takeaways
Bath & Body Works (BBWI - Free Report) delivered a solid second quarter of fiscal 2025, which enabled it to raise the full-year outlook. Net sales reached $1.5 billion, up 1.5% year over year, while adjusted earnings per share were 37 cents. Both metrics were at the high end of management’s prior range. Strong performance during the semiannual sale and the early launch of the “Summerween” collection supported dual-channel traffic and drove this outperformance.
Given this momentum, BBWI revised its full-year adjusted EPS guidance to a range of $3.35-$3.60, lifting the low end from the earlier $3.25-$3.60 forecast. This compares with adjusted EPS of $3.29 reported in fiscal 2024. Net sales growth expectations were also narrowed to 1.5-2.7% compared with the prior 1-3% outlook. The company now anticipates a gross profit rate of about 44%, signaling strong resilience in profitability despite ongoing cost pressures.
Tariffs remain a headwind, with an expected $85 million impact on gross profit for the year, including $40 million concentrated in the third quarter. However, management noted that its vertically integrated, U.S.-based supply chain and ongoing sourcing initiatives position the company well to absorb these pressures and gradually mitigate their effect.
For the third quarter, BBWI expects 1-3% sales growth and EPS of 37-45 cents. Alongside this, the company is advancing investments in digital enhancements, in-store technology and loyalty programs, all aimed at strengthening consumer engagement and improving efficiency.
Finally, the company raised its share repurchase plan to $400 million from $300 million, indicating confidence in cash generation and long-term growth. Management reaffirmed its expectation of consistent 1-3% net sales growth for the second half of the year, confident in the ability to mitigate tariff costs over time while maintaining investment in growth and margin expansion.
Overall, the improved guidance highlights BBWI’s ability to deliver steady sales growth, maintain cost discipline and leverage new initiatives such as the Disney collaboration and expanded alternative distribution channels to drive durable revenue and profit expansion.
BBWI’s Price Performance, Valuation & Estimates
Shares of the company have lost 5.9% in the past three months against the industry’s 18.3% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, Bath & Body Works is trading at a forward 12-month price-to-sales ratio of 0.71X, down from the industry average of 1.96X. BBWI has a Value Score of A.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for this Zacks Rank #3 (Hold) company’s current fiscal-year sales and earnings per share implies year-over-year growth of 2.1% and 4.9%, respectively.
Image Source: Zacks Investment Research
Key Picks
Some better-ranked stocks are Genesco Inc. (GCO - Free Report) , The TJX Companies, Inc. (TJX - Free Report) , and Tilly's, Inc. (TLYS - Free Report) .
Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GCO’s fiscal 2026 earnings and sales implies growth of 67% and 3%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 28.1%.
The TJX Companies is a leading off-price retailer of apparel and home fashions. It carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year earnings and sales indicates growth of 7.5% and 5.4%, respectively, from the year-ago actuals. TJX delivered a trailing four-quarter average earnings surprise of 5.4%.
Tilly's is a specialty retailer in the action sports industry, selling clothing, shoes and accessories. It has a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for Tilly's current fiscal-year earnings indicates growth of 8.8% from the year-ago actual. TLYS delivered a trailing four-quarter average earnings surprise of 60.7%.