Bath & Body Works lifts annual profit forecast as digital demand offsets weak store traffic

Bath & Body Works posted second-quarter sales of $1.51 billion, edging past analysts' estimate of $1.50 billion, according to data compiled by LSEG.

It benefited from about $80 million in tariff refunds during the second quarter. Excluding that benefit, the company's earnings per share stood at 31 cents. Analysts estimated a profit of 24 cents per share.

Bath & Body Works expects annual adjusted profit between $2.60 and $2.80 per share, compared with its prior forecast of $2.40 to $2.65 per share.

It forecast a drop in third-quarter net sales of between 2.5% and 5%, compared to estimates of a 2.9% drop. It sees Q3 adjusted EPS between 7 cents and 12 cents, while analysts expect 26 cents.

Bath & Body Works on Wednesday raised its forecast for full-year profit and beat estimates for second-quarter results, benefiting from demand for body care products and home fragrances on digital channels.

Younger consumers have prioritized small, affordable indulgences, echoing a "lipstick effect" benefit where demand for nice-to-have products cushions broader spending weakness in a strained consumer environment.

Like many consumer companies, Bath & Body Works is in the midst of a turnaround focused on product innovation and enhancing its digital platform under CEO Daniel Heaf.

Bath & Body Works has been expanding its distribution beyond its own stores through third-party channels, including Amazon and a partnership with Ulta Beauty to draw affluent younger consumers.

"The progress (in its turnaround efforts), because it's early, has yet to offset the changes in the whole business," CEO Heaf told Reuters, adding that the company is seeing a decline in store traffic and a broader weakness in mall traffic.