8-K: Bath & Body Works Q1 Earnings Exceed Guidance, CFO Departs

Bath & Body Works reported first quarter 2026 results exceeding guidance, with net sales down 3% and adjusted EPS of $0.32, while announcing CFO Eva Boratto's departure and appointing an interim CFO.

Summary

• Bath & Body Works reported first quarter 2026 net sales of $1.378 billion, a 3% decrease year-over-year, but exceeded their own guidance.
• Diluted earnings per share were $0.90, with adjusted diluted earnings per share at $0.32, also above guidance.
• The company is reaffirming its full-year 2026 guidance for net sales to decline between 4.5% and 2.5%, and adjusted earnings per diluted share between $2.40 and $2.65.
• Chief Financial Officer Eva Boratto will step down on June 12, 2026, to pursue another opportunity, with Tom Javitch appointed as Interim Chief Financial Officer.
• The company expects to generate approximately $600 million in free cash flow for fiscal year 2026.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral to slightly positive filing, as results exceeded guidance, but net sales continue to decline, and a key executive is departing.

Positives

• First quarter net sales and adjusted earnings per share exceeded the company's guidance.
• Operating income increased to $231 million from $209 million in the prior year.
• Net income increased to $183 million from $105 million in the prior year.
• A significant $88 million pre-tax gain was realized from favorable settlements of payment card interchange fee litigation.
• A $62 million tax benefit was recorded due to the resolution of certain tax matters.
• The company expects to generate approximately $600 million in free cash flow for fiscal year 2026.

Negatives

• First quarter net sales decreased by 3% to $1.378 billion compared to $1.424 billion in the prior year.
• The company forecasts second quarter 2026 net sales to decline between 5% to 3%.
• Second quarter 2026 earnings per diluted share are expected to be between $0.20 and $0.25, down from $0.30 in the prior year.
• The company is forecasting full-year 2026 net sales to decline between 4.5% and 2.5%.

Risks

• The company's first-quarter results, while exceeding guidance, remain below the standard the brand is capable of delivering.
• The company is undergoing business transformation activities related to the 'Consumer First Formula'.
• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied.

Future Outlook

The company is maintaining its full-year 2026 guidance for net sales to decline between 4.5% and 2.5%, and earnings per diluted share between $3.00 and $3.25. Adjusted earnings per diluted share guidance is maintained between $2.40 and $2.65. For the second quarter of 2026, net sales are forecasted to decline between 5% to 3%, with earnings per diluted share expected between $0.20 and $0.25. The company expects the impact of its 'Consumer First Formula' to build through the balance of 2026 and more meaningfully into 2027.

Management Comments

• "Our first-quarter results exceeded guidance, but remain below the standard our brand is capable of delivering. That reality reinforces the urgency with which we are executing the Consumer First Formula."
• "Our efforts to strengthen our hero categories, modernize the brand, and expand our reach are beginning to resonate with consumers, and we are encouraged by the early proof points we are seeing."
• "We believe that the foundation we are building will drive improved performance over time, with the impact expected to build through the balance of 2026 and more meaningfully into 2027, as we position the company to return to sustainable, durable growth."
• "We are grateful to Eva for her leadership and many contributions to Bath & Body Works during an important period for the company. We thank her for her partnership and wish her continued success in her next chapter."
• "While we search for a successor, Im confident in Tom Javitchs interim leadership, deep understanding of Bath & Body Works and expertise across the business - from product to store operations to supply chain."
• "It has been a pleasure to serve on the leadership team at Bath & Body Works, and I would like to thank Daniel, my colleagues in the finance organization, the Board and all of our associates for the support during my time at this remarkable company. I leave with confidence in Daniels leadership and the strategy he has put in place, and I look forward to watching as Bath & Body Works continues to regain momentum in the marketplace."

Industry Context

StockSavvy.ai notes that Bath & Body Works' performance in a challenging retail environment, with declining net sales but exceeding internal expectations, reflects broader industry trends of cautious consumer spending and the ongoing need for brands to adapt their strategies. The focus on a 'Consumer First Formula' suggests an industry-wide push towards customer-centricity and brand modernization.

Management Changes

Legal Proceedings

• Favorable settlements of payment card interchange fee litigation resulted in an $88 million pre-tax gain.

Stakeholder Impact

• Shareholders: The company reaffirmed full-year guidance, which may provide some stability, but the ongoing sales decline and CFO departure could create uncertainty.
• Employees: The 'Consumer First Formula' and business transformation activities may lead to changes in operations and focus.
• Management: The departure of the CFO and appointment of an interim CFO will necessitate a transition period and a search for a permanent replacement.

Next Steps

• Conduct a comprehensive search process to identify the next Chief Financial Officer.
• Continue executing the 'Consumer First Formula' to drive improved performance.
• Monitor the impact of strategic efforts expected to build through the balance of 2026 and into 2027.
• File a Quarterly Report on Form 10-Q for the fiscal quarter ending August 1, 2026, which will include the full text of Mr. Meeting's offer letter.

Key Dates

Recommendation

The company exceeded its own guidance for the quarter, which is a positive sign. However, net sales continue to decline, and the departure of the CFO introduces a degree of uncertainty. The reaffirmation of full-year guidance suggests management's confidence, but the market will likely await further evidence of a turnaround driven by the 'Consumer First Formula' before a more positive outlook is warranted. Therefore, a 'hold' recommendation is appropriate pending clearer signs of sustainable growth.

Keywords

Bath & Body Works, BBWI, Q1 Earnings, Financial Results, CFO Departure, Interim CFO, Guidance, Consumer First Formula