[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) Presents the company's unaudited consolidated financial statements and management's analysis for interim periods [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements of Bath & Body Works, Inc. for the second quarter and year-to-date periods of 2025 and 2024, including statements of income, comprehensive income, balance sheets, statements of total equity (deficit), and cash flows, along with detailed notes explaining accounting policies and specific financial items [Consolidated Statements of Income (Unaudited)](index=3&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Details the company's revenues, expenses, and net income for interim periods | Metric | Q2 2025 (millions) | Q2 2024 (millions) | YTD 2025 (millions) | YTD 2024 (millions) | | :--------------------------------- | :----------------- | :----------------- | :------------------ | :------------------ | | Net Sales | $1,549 | $1,526 | $2,974 | $2,910 | | Costs of Goods Sold, Buying and Occupancy | $(909) | $(900) | $(1,687) | $(1,677) | | Gross Profit | $640 | $626 | $1,287 | $1,233 | | General, Administrative and Store Operating Expenses | $(483) | $(443) | $(920) | $(863) | | Operating Income | $157 | $183 | $367 | $370 | | Interest Expense | $(68) | $(77) | $(139) | $(159) | | Other Income, Net | $6 | $47 | $13 | $61 | | Income Before Income Taxes | $95 | $153 | $241 | $272 | | Provision for Income Taxes | $(31) | $(1) | $(72) | $(33) | | Net Income | $64 | $152 | $169 | $239 | | Net Income per Basic Share | $0.31 | $0.68 | $0.80 | $1.07 | | Net Income per Diluted Share | $0.30 | $0.68 | $0.79 | $1.06 | [Consolidated Statements of Comprehensive Income (Unaudited)](index=3&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Reports net income and other comprehensive income, reflecting total changes in equity from non-owner sources | Metric | Q2 2025 (millions) | Q2 2024 (millions) | YTD 2025 (millions) | YTD 2024 (millions) | | :------------------------------------ | :----------------- | :----------------- | :------------------ | :------------------ | | Net Income | $64 | $152 | $169 | $239 | | Other Comprehensive Income (Loss), Net of Tax: | | | | | | Foreign Currency Translation | — | $(1) | $6 | $(3) | | Unrealized Gain (Loss) on Cash Flow Hedges | — | $1 | $(3) | $2 | | Reclassification of Cash Flow Hedges to Earnings | — | — | $(1) | — | | Total Other Comprehensive Income (Loss), Net of Tax | — | — | $2 | $(1) | | Total Comprehensive Income | $64 | $152 | $171 | $238 | [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Provides a snapshot of the company's assets, liabilities, and equity at specific points | Asset/Liability/Equity | August 2, 2025 (millions) | February 1, 2025 (millions) | August 3, 2024 (millions) | | :--------------------------------- | :------------------------ | :-------------------------- | :------------------------ | | **ASSETS** | | | | | Cash and Cash Equivalents | $364 | $674 | $514 | | Accounts Receivable, Net | $131 | $205 | $146 | | Inventories | $977 | $734 | $863 | | Easton Assets Held for Sale | $81 | $96 | — | | Other Current Assets | $153 | $114 | $143 | | Total Current Assets | $1,706 | $1,823 | $1,666 | | Property and Equipment, Net | $1,124 | $1,127 | $1,166 | | Operating Lease Assets | $984 | $949 | $1,043 | | Goodwill | $628 | $628 | $628 | | Trade Name | $165 | $165 | $165 | | Deferred Income Taxes | $133 | $130 | $143 | | Other Assets | $74 | $50 | $137 | | Total Assets | $4,814 | $4,872 | $4,948 | | **LIABILITIES AND EQUITY (DEFICIT)** | | | | | Accounts Payable | $567 | $338 | $411 | | Accrued Expenses and Other | $541 | $584 | $526 | | Current Debt | — | — | $313 | | Current Operating Lease Liabilities | $194 | $192 | $186 | | Income Taxes | $1 | $117 | $61 | | Total Current Liabilities | $1,303 | $1,231 | $1,497 | | Deferred Income Taxes | $23 | $24 | $45 | | Long-term Debt | $3,888 | $3,884 | $3,881 | | Long-term Operating Lease Liabilities | $912 | $883 | $984 | | Other Long-term Liabilities | $235 | $233 | $259 | | Total Shareholders' Equity (Deficit) | $(1,548) | $(1,385) | $(1,719) | | Noncontrolling Interest | $1 | $2 | $1 | | Total Equity (Deficit) | $(1,547) | $(1,383) | $(1,718) | | Total Liabilities and Equity (Deficit) | $4,814 | $4,872 | $4,948 | [Consolidated Statements of Total Equity (Deficit) (Unaudited)](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20TOTAL%20EQUITY%20%28DEFICIT%29) Outlines changes in shareholders' equity, including net income, dividends, and share repurchases - Total Equity (Deficit) decreased from **$(1,383) million** as of February 1, 2025, to **$(1,547) million** as of August 2, 2025, primarily due to **share repurchases ($256 million year-to-date 2025)** and **cash dividends ($85 million year-to-date 2025)**, partially offset by **net income ($169 million year-to-date 2025)**[21](index=21&type=chunk)[22](index=22&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Summarizes cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | YTD 2025 (millions) | YTD 2024 (millions) | | :------------------------------------ | :------------------ | :------------------ | | Net Income | $169 | $239 | | Depreciation of Long-lived Assets | $128 | $142 | | Share-based Compensation Expense | $18 | $22 | | Gain on Sales of Easton Investments | — | $(39) | | Deferred Income Taxes | $(1) | $(102) | | Accounts Receivable | $75 | $78 | | Inventories | $(241) | $(154) | | Accounts Payable, Accrued Expenses and Other | $157 | $(67) | | Income Taxes Payable | $(139) | $(79) | | Other Assets and Liabilities | $(21) | $(10) | | Net Cash Provided by Operating Activities | $145 | $30 | | Capital Expenditures | $(93) | $(101) | | Proceeds from Sales of Easton Investments | — | $50 | | Other Investing Activities | $(2) | $11 | | Net Cash Used for Investing Activities | $(95) | $(40) | | Payments for Long-term Debt | — | $(202) | | Repurchases of Common Stock | $(254) | $(248) | | Dividends Paid | $(85) | $(90) | | Tax Payments Related to Share-based Awards | $(8) | $(15) | | Other Financing Activities | $(15) | $(5) | | Net Cash Used for Financing Activities | $(362) | $(560) | | Effects of Exchange Rate Changes on Cash and Cash Equivalents | $2 | — | | Net Decrease in Cash and Cash Equivalents | $(310) | $(570) | | Cash and Cash Equivalents, Beginning of Year | $674 | $1,084 | | Cash and Cash Equivalents, End of Period | $364 | $514 | [Notes to Consolidated Financial Statements (Unaudited)](index=8&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed explanations of accounting policies, significant transactions, and financial items - **Description of Business and Basis of Presentation (Note 1):** - The Company is a global omnichannel retailer of personal care and home fragrance products, with seasonal operations peaking in Q4[28](index=28&type=chunk) - Foreign currency forward contracts are used as cash flow hedges to mitigate Canadian dollar exchange rate risk[33](index=33&type=chunk) - Easton assets held for sale were **$81 million** as of August 2, 2025, a decrease from **$96 million** as of February 1, 2025, with a **$17 million** reclassification to long-term Other Assets[35](index=35&type=chunk)[36](index=36&type=chunk) - In Q2 2024, the Company sold Easton equity interests for **$50 million**, recognizing a **$39 million** pre-tax gain[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - **Revenue Recognition (Note 2):** - Accounts receivable from revenue-generating activities totaled **$75 million** as of August 2, 2025[45](index=45&type=chunk) - Deferred revenue, primarily from gift cards and loyalty points, was **$172 million** as of August 2, 2025, with **$87 million** recognized year-to-date 2025 from beginning-of-year balances[46](index=46&type=chunk) - **Net Sales Disaggregation (Note 2):** | Channel | Q2 2025 (millions) | Q2 2024 (millions) | YTD 2025 (millions) | YTD 2024 (millions) | | :------------------------ | :----------------- | :----------------- | :------------------ | :------------------ | | Stores - U.S. and Canada | $1,196 | $1,140 | $2,307 | $2,205 | | Direct - U.S. and Canada | $267 | $297 | $517 | $558 | | International | $86 | $89 | $150 | $147 | | Total Net Sales | $1,549 | $1,526 | $2,974 | $2,910 | - **Net Income Per Share and Shareholders' Equity (Deficit) (Note 3):** - Weighted-average diluted shares were **211 million** for Q2 2025 (vs **223 million** Q2 2024) and **213 million** for YTD 2025 (vs **225 million** YTD 2024)[51](index=51&type=chunk) - The Company repurchased **8.468 million shares** for **$256 million** year-to-date 2025 under the January 2025 Program, with **$262 million** remaining authority[53](index=53&type=chunk)[54](index=54&type=chunk) - Cash dividends of **$0.20 per share** were paid in Q1 and Q2 2025, totaling **$85 million** year-to-date[55](index=55&type=chunk)[56](index=56&type=chunk) - **Inventories (Note 4):** - Total inventories increased to **$977 million** as of August 2, 2025, from **$734 million** as of February 1, 2025, and **$863 million** as of August 3, 2024[57](index=57&type=chunk) - **Long-lived Assets (Note 5):** - Property and Equipment, Net was **$1,124 million** as of August 2, 2025[58](index=58&type=chunk) - Depreciation expense was **$64 million** for Q2 2025 (vs **$71 million** Q2 2024) and **$128 million** for YTD 2025 (vs **$142 million** YTD 2024)[58](index=58&type=chunk) - **Income Taxes (Note 6):** - Effective tax rate for Q2 2025 was **32.3%** (vs **0.9%** Q2 2024) and for YTD 2025 was **29.9%** (vs **12.1%** YTD 2024)[60](index=60&type=chunk) - The higher 2025 rates were due to leadership transition costs and accrued interest expense related to unrecognized tax benefits[61](index=61&type=chunk) - The lower 2024 rates were due to the release of a valuation allowance from Easton investment sales[61](index=61&type=chunk) - **Long-term Debt and Borrowing Facility (Note 7):** - Total Long-term Debt, net of current portion, was **$3,888 million** as of August 2, 2025[65](index=65&type=chunk) - The Company did not repurchase any senior notes in Q2 or YTD 2025[66](index=66&type=chunk) - In Q2 and YTD 2024, **$91 million** and **$200 million** principal amounts of senior notes were repurchased, respectively[67](index=67&type=chunk) - The ABL Facility was amended in May 2025, extending its expiration to May 2030 and removing an interest rate credit spread adjustment[70](index=70&type=chunk) - Availability under the ABL Facility was **$674 million** as of August 2, 2025[72](index=72&type=chunk) - **Fair Value Measurements (Note 8):** - The estimated fair value of total outstanding debt was **$3,992 million** as of August 2, 2025, compared to a principal value of **$3,916 million**[76](index=76&type=chunk) - **Commitments and Contingencies (Note 9):** - Contingent obligations related to lease payments from the Victoria's Secret & Co. spin-off were **$224 million** as of August 2, 2025[79](index=79&type=chunk) - **Segment Reporting (Note 10):** - The Company operates as a single segment, managed at the consolidated level, with Adjusted Operating Income as the key profitability measure for the CODM[81](index=81&type=chunk) [Report of Independent Registered Public Accounting Firm](index=17&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Presents the auditor's review opinion on the interim consolidated financial statements - Ernst & Young LLP reviewed the interim consolidated financial statements for the periods ended August 2, 2025, and August 3, 2024, and found no material modifications needed for conformity with U.S. GAAP[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) - They also confirmed the fair statement of the February 1, 2025 consolidated balance sheet in relation to the previously audited annual financial statements[90](index=90&type=chunk) [Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995](index=18&type=section&id=SAFE%20HARBOR%20STATEMENT%20UNDER%20THE%20PRIVATE%20SECURITIES%20LITIGATION%20REFORM%20ACT%20OF%201995) Cautions investors about forward-looking statements and potential material differences in actual results - The statement cautions that forward-looking statements in the report involve risks and uncertainties, and actual results may differ materially[92](index=92&type=chunk) - It disclaims any obligation to publicly update or revise these statements[93](index=93&type=chunk) - The company also advises monitoring its investor relations website, press releases, SEC filings, public conference calls, webcasts, and social media channels for material financial and operational information[94](index=94&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and results of operations for the second quarter and year-to-date periods of 2025 compared to 2024, including an executive overview, outlook, detailed analysis of revenues, expenses, and liquidity, and discussions of accounting policies and market risks [Executive Overview](index=18&type=section&id=Executive%20Overview) Provides a high-level summary of the company's financial performance and key operational highlights - Q2 2025 Net Sales increased by **$23 million (1.5%)** to **$1,549 million**, driven by North American sales[96](index=96&type=chunk) - Q2 2025 Operating Income decreased by **$26 million (13.9%)** to **$157 million**, with the operating income rate declining to **10.2%** from **12.0%**, primarily due to higher General, Administrative and Store Operating Expenses, including leadership transition costs[96](index=96&type=chunk) [Outlook](index=18&type=section&id=Outlook) Discusses the company's expectations for future performance, strategic priorities, and market conditions - The company anticipates continued cautious and value-seeking consumer behavior[97](index=97&type=chunk) - Strategic focus areas include elevating the owned digital platform, amplifying efficacy messaging with modernized packaging, and exploring new distribution channels to reach younger consumers and drive brand discovery[98](index=98&type=chunk) - The company believes its vertically integrated, predominantly U.S.-based supply chain positions it well to manage current tariffs and mitigate future costs through strategic sourcing and operational efficiencies[98](index=98&type=chunk) [Adjusted Financial Information](index=19&type=section&id=Adjusted%20Financial%20Information) Reconciles non-GAAP financial measures to GAAP counterparts, explaining adjustments - The company uses non-GAAP adjusted financial measures (Operating Income, Net Income, Net Income Per Diluted Share) to exclude items like leadership transition costs and gains/tax benefits from Easton investment sales, believing these are not indicative of core operations and provide better comparability[99](index=99&type=chunk)[100](index=100&type=chunk) | Metric | Q2 2025 (millions) | Q2 2024 (millions) | YTD 2025 (millions) | YTD 2024 (millions) | | :------------------------------------------ | :----------------- | :----------------- | :------------------ | :------------------ | | Reported Operating Income | $157 | $183 | $367 | $370 | | Leadership Transition Costs (a) | $15 | — | $15 | — | | **Adjusted Operating Income** | **$172** | **$183** | **$382** | **$370** | | Reported Net Income | $64 | $152 | $169 | $239 | | Leadership Transition Costs (a) | $15 | — | $15 | — | | Gain on Sales of Easton Investments (b) | — | $(39) | — | $(39) | | Tax Effect of Adjustments | $(1) | $14 | $(1) | $14 | | Tax Benefit from Valuation Allowance Release (c) | — | $(44) | — | $(44) | | **Adjusted Net Income** | **$78** | **$83** | **$183** | **$170** | | Reported Net Income Per Diluted Share | $0.30 | $0.68 | $0.79 | $1.06 | | Leadership Transition Costs (a) | $0.07 | — | $0.07 | — | | Gain on Sales of Easton Investments (b) | — | $(0.18) | — | $(0.18) | | Tax Effect of Adjustments | $(0.01) | $0.06 | $(0.01) | $0.06 | | Tax Benefit from Valuation Allowance Release (c) | — | $(0.20) | — | $(0.19) | | **Adjusted Net Income Per Diluted Share** | **$0.37** | **$0.37** | **$0.86** | **$0.76** | [Company-operated Stores](index=20&type=section&id=Company-operated%20Stores) Presents operational metrics and store count changes for company-managed retail locations | Metric | Q2 2025 | Q2 2024 | % Change Q2 | YTD 2025 | YTD 2024 | % Change YTD | | :-------------------------------- | :-------- | :-------- | :------------ | :--------- | :--------- | :----------- | | Sales per Average Selling Square Foot ($) | $220 | $216 | 2% | $427 | $420 | 2% | | Sales per Average Store (thousands) | $627 | $613 | 2% | $1,216 | $1,188 | 2% | | Average Store Size (selling square feet) | 2,844 | 2,833 | —% | | | | | Total Selling Square Feet (thousands) | 5,094 | 4,989 | 2% | | | | - For year-to-date 2025, the company opened **33 U.S. stores** and closed **24**, resulting in a net increase of **9 U.S. stores**, bringing the total to **1,791**[105](index=105&type=chunk) - Canadian stores remained at **113**[105](index=105&type=chunk) [Partner-operated Stores](index=20&type=section&id=Partner-operated%20Stores) Details changes in international stores operated by franchise and license partners - For year-to-date 2025, international partner-operated stores increased by **7** (**25 opened, 18 closed**), totaling **501**[106](index=106&type=chunk) - International - Travel Retail stores increased by **1** (**3 opened, 2 closed**), totaling **36**[106](index=106&type=chunk) [Results of Operations - Second Quarter 2025 Compared to the Second Quarter of 2024](index=20&type=section&id=Results%20of%20Operations%20-%20Second%20Quarter%202025%20Compared%20to%20the%20Second%20Quarter%20of%202024) Analyzes financial performance and key drivers for Q2 2025 compared to Q2 2024 | Metric | Q2 2025 (millions) | Q2 2024 (millions) | % Change | | :------------------------------------------ | :----------------- | :----------------- | :--------- | | Net Sales | $1,549 | $1,526 | 1.5% | | Stores - U.S. and Canada Net Sales | $1,196 | $1,140 | 4.9% | | Direct - U.S. and Canada Net Sales | $267 | $297 | (10.1%) | | International Net Sales | $86 | $89 | (2.9%) | | Gross Profit | $640 | $626 | 2.2% | | Gross Profit Rate | 41.3% | 41.0% | 0.3 ppt | | General, Administrative and Store Operating Expenses | $483 | $443 | 9.0% | | General, Administrative and Store Operating Expense Rate | 31.1% | 29.1% | 2.0 ppt | | Interest Expense | $68 | $77 | (11.7%) | | Other Income, Net | $6 | $47 | (87.2%) | | Effective Tax Rate | 32.3% | 0.9% | 31.4 ppt | - Stores Net Sales increased due to higher transactions (BOPIS orders) and new store growth, and increased average dollar sales[109](index=109&type=chunk) - Direct Net Sales decreased due to fewer fulfilled orders, as customers shifted to BOPIS[111](index=111&type=chunk) - Gross Profit rate increased due to leverage on Occupancy Expenses from exiting a third-party fulfillment center, with merchandise margin rate remaining flat due to strategic pricing and cost management offsetting tariffs[112](index=112&type=chunk)[113](index=113&type=chunk) - General, Administrative and Store Operating Expenses increased primarily due to **$15 million** in leadership transition costs, higher payroll-related costs (wages, new stores), and increased healthcare costs[114](index=114&type=chunk) - Other Income, Net decreased significantly due to the absence of the **$39 million** pre-tax gain from Easton investment sales in Q2 2024 and lower interest income[115](index=115&type=chunk) - The effective tax rate increased substantially due to leadership transition costs in 2025 and the release of a valuation allowance on a deferred tax asset from Easton investment sales in 2024[116](index=116&type=chunk) [Results of Operations - Year-to-Date 2025 Compared to Year-to-Date 2024](index=21&type=section&id=Results%20of%20Operations%20-%20Year-to-Date%202025%20Compared%20to%20Year-to-Date%202024) Analyzes financial performance and key drivers for YTD 2025 compared to YTD 2024 | Metric | YTD 2025 (millions) | YTD 2024 (millions) | % Change | | :------------------------------------------ | :------------------ | :------------------ | :--------- | | Operating Income | $367 | $370 | (0.8%) | | Operating Income Rate | 12.3% | 12.7% | (0.4 ppt) | | Net Sales | $2,974 | $2,910 | 2.2% | | Stores - U.S. and Canada Net Sales | $2,307 | $2,205 | 4.6% | | Direct - U.S. and Canada Net Sales | $517 | $558 | (7.4%) | | International Net Sales | $150 | $147 | 2.3% | | Gross Profit | $1,287 | $1,233 | 4.4% | | Gross Profit Rate | 43.3% | 42.4% | 0.9 ppt | | General, Administrative and Store Operating Expenses | $920 | $863 | 6.6% | | General, Administrative and Store Operating Expense Rate | 30.9% | 29.6% | 1.3 ppt | | Interest Expense | $139 | $159 | (12.6%) | | Other Income, Net | $13 | $61 | (78.7%) | | Effective Tax Rate | 29.9% | 12.1% | 17.8 ppt | - Operating Income decreased slightly year-over-year, with the rate declining due to increased operating expenses[117](index=117&type=chunk) - Stores Net Sales increased due to higher transactions (BOPIS orders) and new store growth, and increased average dollar sales[120](index=120&type=chunk) - Direct Net Sales decreased due to fewer fulfilled orders, as customers shifted to BOPIS[121](index=121&type=chunk) - Gross Profit rate improved due to merchandise margin rate improvement (strategic pricing, cost management offsetting tariffs) and leverage on Occupancy Expenses from exiting a third-party fulfillment center[122](index=122&type=chunk)[123](index=123&type=chunk) - General, Administrative and Store Operating Expenses increased due to higher payroll-related costs (wages, new stores), **$15 million** in leadership transition costs, increased healthcare costs, and incremental marketing investments[124](index=124&type=chunk) - Other Income, Net decreased significantly due to the absence of the **$39 million** pre-tax gain from Easton investment sales in 2024 and lower interest income[127](index=127&type=chunk) - The effective tax rate increased substantially due to accrued interest expense related to unrecognized tax benefits and leadership transition costs in 2025, and the release of a valuation allowance from Easton investment sales in 2024[128](index=128&type=chunk)[129](index=129&type=chunk) [Financial Condition](index=23&type=section&id=FINANCIAL%20CONDITION) Assesses the company's overall financial health, including assets, liabilities, and equity [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's ability to meet financial obligations and fund operations - The company is committed to maintaining adequate liquidity, primarily supported by cash generated from operating activities and borrowing capacity under its ABL Facility[130](index=130&type=chunk) - Cash needs peak during summer and fall for inventory build-up[130](index=130&type=chunk) - Foreign subsidiaries held **$123 million** in cash and cash equivalents as of August 2, 2025[132](index=132&type=chunk) - Management believes current cash, operating cash flows, and ABL facility capacity are sufficient for liquidity needs for at least the next twelve months[132](index=132&type=chunk) [Cash Flows](index=23&type=section&id=Cash%20Flows) Provides a detailed analysis of cash generated and used across operating, investing, and financing activities | Cash Flow Activity | YTD 2025 (millions) | YTD 2024 (millions) | | :------------------------------------ | :------------------ | :------------------ | | Net Cash Provided by Operating Activities | $145 | $30 | | Net Cash Used for Investing Activities | $(95) | $(40) | | Net Cash Used for Financing Activities | $(362) | $(560) | | Net Decrease in Cash and Cash Equivalents | $(310) | $(570) | | Cash and Cash Equivalents, End of Period | $364 | $514 | - Operating cash flow significantly increased to **$145 million** in YTD 2025 from **$30 million** in YTD 2024, driven by working capital improvements (Accounts Payable, Accrued Expenses and Other) despite higher inventories[134](index=134&type=chunk)[135](index=135&type=chunk) - Investing activities used **$95 million** in YTD 2025, primarily for capital expenditures (**$60 million** for new/remodel stores, **$20 million** for technology projects)[136](index=136&type=chunk)[137](index=137&type=chunk) - This compares to **$40 million** used in YTD 2024, which included **$50 million** from Easton investment sales[138](index=138&type=chunk) - Financing activities used **$362 million** in YTD 2025, mainly for **$254 million** in share repurchases and **$85 million** in dividends[139](index=139&type=chunk) - This is lower than **$560 million** used in YTD 2024, which included **$202 million** for debt repurchases[140](index=140&type=chunk) - Planned capital expenditures for 2025 are **$250 million to $270 million**, focusing on real estate and technology[140](index=140&type=chunk) [Common Stock and Debt Repurchases](index=24&type=section&id=Common%20Stock%20and%20Debt%20Repurchases) Details the company's activities related to buying back its stock and debt instruments - The Board determines repurchase authorizations based on profit, cash flow, capital requirements, liquidity, and borrowing arrangements[141](index=141&type=chunk) | Repurchase Program | Amount Authorized (millions) | Shares Repurchased YTD 2025 (thousands) | Shares Repurchased YTD 2024 (thousands) | Amount Repurchased YTD 2025 (millions) | Amount Repurchased YTD 2024 (millions) | Average Stock Price YTD 2025 ($) | Average Stock Price YTD 2024 ($) | | :----------------- | :--------------------------- | :-------------------------------------- | :-------------------------------------- | :------------------------------------- | :------------------------------------- | :--------------------------- | :--------------------------- | | February 2022 | $1,500 | NA | 842 | NA | $39 | NA | $46.08 | | January 2024 | $500 | 460 | 4,921 | $17 | $210 | $37.67 | $42.72 | | January 2025 | $500 | 8,008 | NA | $239 | NA | $29.78 | NA | | **Total** | | **8,468** | **5,763** | **$256** | **$249** | | | - The January 2024 Program was cancelled on February 27, 2025, with **$121 million** remaining authorization[144](index=144&type=chunk) - The January 2025 Program had **$262 million** of remaining authority as of August 2, 2025[144](index=144&type=chunk) - Shares repurchased are retired and cancelled[148](index=148&type=chunk) - No senior notes were repurchased in Q2 or YTD 2025[149](index=149&type=chunk) - In Q2 and YTD 2024, **$91 million** and **$200 million** principal amounts of senior notes were repurchased, respectively, resulting in pre-tax losses[149](index=149&type=chunk) [Dividend Policy and Procedures](index=25&type=section&id=Dividend%20Policy%20and%20Procedures) Outlines the company's approach to distributing earnings to shareholders via dividends - The Board determines future dividends based on profit, cash flow, capital requirements, liquidity, and borrowing arrangements[145](index=145&type=chunk) | Period | Ordinary Dividends (per share) | Total Paid (millions) | | :------------- | :----------------------------- | :-------------------- | | **2025** | | | | First Quarter | $0.20 | $43 | | Second Quarter | $0.20 | $42 | | **Total** | **$0.40** | **$85** | | **2024** | | | | First Quarter | $0.20 | $45 | | Second Quarter | $0.20 | $45 | | **Total** | **$0.40** | **$90** | - A third quarter 2025 ordinary dividend of **$0.20 per share** was declared in August 2025, payable on September 5, 2025[145](index=145&type=chunk) [Long-term Debt and Borrowing Facility](index=25&type=section&id=Long-term%20Debt%20and%20Borrowing%20Facility) Describes the company's long-term debt obligations and available credit facilities | Debt Type | August 2, 2025 (millions) | February 1, 2025 (millions) | August 3, 2024 (millions) | | :------------------------------------------ | :------------------------ | :-------------------------- | :------------------------ | | Senior Debt with Subsidiary Guarantee | | | | | $500 million, 9.375% Fixed Interest Rate Notes due July 2025 ("2025 Notes") | — | — | $313 | | $284 million, 6.694% Fixed Interest Rate Notes due January 2027 ("2027 Notes") | $278 | $277 | $275 | | $444 million, 5.250% Fixed Interest Rate Notes due February 2028 ("2028 Notes") | $443 | $443 | $443 | | $482 million, 7.500% Fixed Interest Rate Notes due June 2029 ("2029 Notes") | $477 | $476 | $475 | | $844 million, 6.625% Fixed Interest Rate Notes due October 2030 ("2030 Notes") | $839 | $838 | $838 | | $802 million, 6.875% Fixed Interest Rate Notes due November 2035 ("2035 Notes") | $797 | $796 | $796 | | $575 million, 6.750% Fixed Interest Rate Notes due July 2036 ("2036 Notes") | $571 | $571 | $571 | | Total Senior Debt with Subsidiary Guarantee | $3,405 | $3,401 | $3,711 | | Senior Debt | | | | | $284 million, 6.950% Fixed Interest Rate Debentures due March 2033 ("2033 Notes") | $283 | $283 | $283 | | $201 million, 7.600% Fixed Interest Rate Notes due July 2037 ("2037 Notes") | $200 | $200 | $200 | | Total Senior Debt | $483 | $483 | $483 | | **Total Debt** | **$3,888** | **$3,884** | **$4,194** | | Current Debt | — | — | $(313) | | **Total Long-term Debt, Net of Current Portion** | **$3,888** | **$3,884** | **$3,881** | - Cash paid for interest was **$143 million** YTD 2025, down from **$152 million** YTD 2024[147](index=147&type=chunk) - The ABL Facility was amended in May 2025, extending its expiration to May 2030 and removing an interest rate credit spread adjustment[152](index=152&type=chunk) - As of August 2, 2025, the borrowing base was **$683 million**, with no outstanding borrowings and **$674 million** availability after **$9 million** in outstanding letters of credit[153](index=153&type=chunk)[154](index=154&type=chunk) - The ABL Facility requires a fixed charge coverage ratio of not less than **1.00 to 1.00** under certain conditions, which the company was not required to maintain as of August 2, 2025[156](index=156&type=chunk) [Credit Ratings](index=26&type=section&id=Credit%20Ratings) Presents the company's creditworthiness assessments from major rating agencies | Rating Agency | Corporate | Senior Unsecured Debt with Subsidiary Guarantee | Senior Unsecured Debt | Outlook | | :------------ | :-------- | :---------------------------------------------- | :-------------------- | :-------- | | Moody's | Ba2 | Ba2 | B1 | Stable | | S&P | BB+ | BB+ | BB | Stable | [Guarantor Summarized Financial Information](index=27&type=section&id=Guarantor%20Summarized%20Financial%20Information) Provides condensed financial data for subsidiaries guaranteeing the company's debt - Certain wholly-owned subsidiaries guarantee the company's senior unsecured notes (2027, 2028, 2029, 2030, 2035, 2036 Notes)[158](index=158&type=chunk) - These guarantees are full and unconditional, joint and several, and limited by fraudulent conveyance provisions[159](index=159&type=chunk)[160](index=160&type=chunk) | Metric | August 2, 2025 (millions) | February 1, 2025 (millions) | | :-------------------- | :------------------------ | :-------------------------- | | Current Assets | $2,031 | $2,075 | | Noncurrent Assets | $2,441 | $2,411 | | Current Liabilities | $2,527 | $2,394 | | Noncurrent Liabilities | $4,941 | $4,898 | | Metric (YTD 2025) | Amount (millions) | | :------------------------ | :---------------- | | Net Sales | $2,821 | | Gross Profit | $1,200 | | Operating Income | $338 | | Income Before Income Taxes | $210 | | Net Income | $145 | [Contingent Liabilities and Contractual Obligations](index=28&type=section&id=Contingent%20Liabilities%20and%20Contractual%20Obligations) Identifies potential future financial obligations and commitments - Remaining contingent obligations related to lease payments from the Victoria's Secret & Co. spin-off were **$224 million** as of August 2, 2025, expiring through 2037[166](index=166&type=chunk) - No material changes to contractual obligations since February 1, 2025, though merchandise inventory-related purchase obligations fluctuate seasonally[167](index=167&type=chunk) [Recently Issued Accounting Pronouncements](index=28&type=section&id=RECENTLY%20ISSUED%20ACCOUNTING%20PRONOUNCEMENTS) Discusses new accounting standards and their potential impact on financial reporting - ASU 2023-09 (Improvements to Income Tax Disclosures), effective for fiscal years beginning after December 15, 2024, requires enhanced income tax disclosures[168](index=168&type=chunk) - The company is evaluating its impact[168](index=168&type=chunk) - ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for annual reporting of fiscal years beginning after December 15, 2026, requires disaggregated expense information[169](index=169&type=chunk) - The company is evaluating its impact[169](index=169&type=chunk) [Critical Accounting Policies and Estimates](index=28&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Highlights accounting policies requiring significant management judgment and estimation - Management's critical accounting policies and estimates, including those for inventories, long-lived store assets, claims, income taxes, and revenue recognition, remain unchanged from the 2024 Annual Report on Form 10-K[170](index=170&type=chunk)[171](index=171&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details the company's exposure to market risks, primarily foreign currency exchange rates and interest rates, and the strategies employed to manage these risks, including the use of derivative financial instruments [Market Risk Overview](index=28&type=section&id=Market%20Risk) Introduces market risks the company faces and its general approach to managing them - The company's market risk stems from potential losses in fair value, earnings, or cash flows due to changes in foreign currency exchange rates or interest rates[172](index=172&type=chunk) - Derivative financial instruments, such as foreign currency forward contracts and interest rate swaps, are used to manage these exposures, not for trading[172](index=172&type=chunk) [Foreign Exchange Rate Risk](index=28&type=section&id=Foreign%20Exchange%20Rate%20Risk) Explains the company's exposure to currency fluctuations and its hedging strategies - The company is exposed to foreign exchange rate risk on Canadian dollar-denominated earnings, as merchandise sold in Canada is sourced in U.S. dollars[173](index=173&type=chunk) - Foreign currency forward contracts are used to mitigate this, but may not offset all short-term impacts[174](index=174&type=chunk) - Royalties from international partners, though denominated in U.S. dollars, are calculated based on local currency sales, also exposing them to exchange rate fluctuations[174](index=174&type=chunk) [Interest Rate Risk](index=29&type=section&id=Interest%20Rate%20Risk) Describes the company's sensitivity to changes in interest rates on investments and debt - The investment portfolio, primarily short-term, high-quality interest-bearing instruments (U.S. government obligations, money market funds, commercial paper, bank deposits), is managed to preserve principal and maintain liquidity, minimizing material risk from interest rate changes[175](index=175&type=chunk) - All outstanding long-term debt as of August 2, 2025, has fixed interest rates, limiting exposure to interest rate changes to the fair value of debt[176](index=176&type=chunk) [Concentration of Credit Risk](index=29&type=section&id=Concentration%20of%20Credit%20Risk) Addresses potential credit losses from financial instruments and business partners - The company manages credit risk by monitoring the credit standing of financial institutions for cash, cash equivalents, and derivative contracts, and limiting exposure to any single entity[177](index=177&type=chunk) - It also reviews the credit standing of franchise, license, and wholesale partners[177](index=177&type=chunk) [Fair Value Measurements](index=29&type=section&id=Fair%20Value%20Measurements) Provides information on the valuation of financial instruments at fair value | Debt Valuation | August 2, 2025 (millions) | February 1, 2025 (millions) | August 3, 2024 (millions) | | :---------------------- | :------------------------ | :-------------------------- | :------------------------ | | Principal Value | $3,916 | $3,916 | $4,230 | | Fair Value, Estimated | $3,992 | $3,986 | $4,241 | - The carrying values of Accounts Receivable, Accounts Payable, and Accrued Expenses approximate their fair values due to their short maturities[179](index=179&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) This section reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=29&type=section&id=Evaluation%20of%20disclosure%20controls%20and%20procedures) Assesses the effectiveness of controls ensuring timely and accurate public disclosures - As of August 2, 2025, management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective in ensuring timely and accurate reporting of required information[180](index=180&type=chunk) [Changes in Internal Control Over Financial Reporting](index=29&type=section&id=Changes%20in%20internal%20control%20over%20financial%20reporting) Reports on any modifications to internal controls over financial reporting - There were no changes in internal control over financial reporting during the second quarter of 2025 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[181](index=181&type=chunk) [PART II—OTHER INFORMATION](index=30&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) Contains additional information not covered in financial statements, including legal matters and exhibits [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) This section addresses the company's involvement in various lawsuits and claims arising in the ordinary course of business - The company is a defendant in various lawsuits, including commercial, tort, intellectual property, tax, employment, and class action claims[184](index=184&type=chunk) - Management believes that the ultimate liability from these proceedings is not likely to have a material adverse effect on the company's results of operations, financial condition, or cash flows[184](index=184&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20RISK%20FACTORS) This section refers to the comprehensive discussion of risk factors affecting the business and financial results - The risk factors affecting the company's business and financial results are discussed in Item 1A. Risk Factors in the 2024 Annual Report on Form 10-K, and these factors could cause actual results to differ materially from forward-looking statements[185](index=185&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the repurchases of common stock during the second quarter of 2025 | Fiscal Period | Total Number of Shares Purchased (thousands) | Average Price Paid per Share ($) | Total Number of Shares Purchased as Part of Publicly Announced Programs (thousands) | Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Programs (millions) | | :------------ | :------------------------------------------- | :--------------------------- | :-------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------- | | May 2025 | 608 | $29.32 | 517 | 367,301 | | June 2025 | 2,258 | $27.76 | 2,252 | 304,798 | | July 2025 | 1,382 | $31.50 | 1,373 | 261,510 | | **Total** | **4,248** | | **4,142** | | - The total shares repurchased include those from publicly announced programs and shares related to tax payments upon vesting of associate awards and stock option exercise[186](index=186&type=chunk) [Item 3. Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) Confirms the absence of any defaults on the company's senior debt obligations - Not applicable[188](index=188&type=chunk) [Item 4. Mine Safety Disclosures](index=30&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) Confirms the absence of mine safety disclosures, as not applicable to operations - Not applicable[189](index=189&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20OTHER%20INFORMATION) Provides miscellaneous disclosures, including details on insider trading arrangements - None of the company's directors or executive officers adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the second quarter of 2025[190](index=190&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20EXHIBITS) Lists all supplementary documents and agreements filed with the report - The report includes various exhibits such as a Letter Agreement with Eva Boratto, a letter regarding unaudited interim financial information, a list of guarantor subsidiaries, Section 302 and 906 Certifications, and XBRL-related documents[192](index=192&type=chunk) [Signature](index=32&type=section&id=SIGNATURE) Authenticates the filing with the signature of the principal financial and accounting officer - The report was signed by Eva C. Boratto, Chief Financial Officer, on August 28, 2025, who is also the principal financial and accounting officer[195](index=195&type=chunk)

Company Overview - Proactive is a financial news publisher that provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The company has a team of experienced and qualified news journalists who produce independent content [2] Market Focus - Proactive specializes in medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [3] - The news team delivers insights across various sectors including biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto, and emerging digital and EV technologies [3] Technology Adoption - Proactive is recognized for its forward-looking approach and enthusiastic adoption of technology to enhance workflows [4] - The company utilizes automation and software tools, including generative AI, while ensuring that all content is edited and authored by humans [5]

Financial Performance - Bath & Body Works reported revenue of $1.55 billion for the quarter ended July 2025, reflecting a 1.5% increase year-over-year [1] - Earnings per share (EPS) remained stable at $0.37, consistent with the same quarter last year [1] - The revenue reported was a slight miss of -0.29% compared to the Zacks Consensus Estimate of $1.55 billion, and there was no EPS surprise as it matched the consensus estimate [1] Key Metrics - The stock of Bath & Body Works has returned +5% over the past month, outperforming the Zacks S&P 500 composite, which saw a +1.5% change [3] - The company currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3] Store Operations - Total company-operated stores reached 1,904, slightly below the average estimate of 1,909 from four analysts [4] - In the U.S., there were 1,791 stores, compared to the average estimate of 1,797 from two analysts [4] - In Canada, the total number of stores was 113, matching the average estimate from two analysts [4] Geographic Net Sales - Geographic net sales for U.S. and Canada amounted to $1.2 billion, exceeding the average estimate of $1.17 billion and representing a year-over-year increase of +4.9% [4] - International geographic net sales were reported at $86 million, slightly above the estimated $84.84 million, but this reflects a -3.4% change year-over-year [4] - Direct sales in the U.S. and Canada were $267 million, falling short of the average estimate of $295.55 million, marking a -10.1% decline year-over-year [4]

Financial Data and Key Metrics Changes - The company reported net sales of $1.5 billion, an increase of 1.5% compared to the prior year, achieving results at the high end of guidance [25][31] - Adjusted earnings per diluted share were $0.37, also at the high end of guidance [25] - Gross profit rate was 41.3%, exceeding expectations and increasing by 30 basis points year-over-year [34] - Adjusted SG&A as a percentage of net sales was 30.2%, representing a 110 basis point deleverage compared to the prior year [34] Business Line Data and Key Metrics Changes - The sanitizer business performed well, with positive consumer response to new products [28] - Men's business showed growth, particularly highlighted during Father's Day [28] - Body care category was disappointing, down low single digits, with a need for more newness [96] Market Data and Key Metrics Changes - U.S. and Canadian stores net sales totaled $1.2 billion, an increase of 5% versus the prior year [32] - Direct net sales were $267 million, a decrease of 10% compared to last year [32] - International net sales were $86 million, a decline of 3%, in line with expectations [33] Company Strategy and Development Direction - The company aims to accelerate growth by focusing on digital platform enhancements, product efficacy messaging, and expanding distribution channels [10][14] - A multi-year partnership with Disney was announced to leverage brand storytelling and consumer engagement [13][100] - The company is exploring new distribution forms, including college bookstores, to reach younger consumers [19][90] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are cautious and value-seeking, prioritizing purchases that support personal well-being [6][7] - The company is confident in its ability to absorb tariff impacts and is focused on mitigating costs through strategic sourcing and operational efficiencies [39][104] - Management expressed optimism about the potential for growth across various categories and markets, emphasizing the importance of innovation and consumer connection [12][21] Other Important Information - The company plans to increase share repurchases from $300 million to $400 million [40] - The loyalty program has approximately 39 million active members, up 5% compared to the prior year [30] Q&A Session Summary Question: Assessment of opportunities ahead and traffic trends - Management sees more opportunities for growth than initially expected, with a focus on digital platforms and product efficacy [46][64] - Traffic was up in Q2, with June being particularly strong, while July normalized after the Halloween launch [52] Question: Marketing changes and customer response - Marketing is shifting to focus on emotional connections rather than pricing, with positive consumer responses noted [55][57] - The company is utilizing store windows for impactful marketing [57] Question: Tariff impact and SG&A deleverage - Q3 is expected to be disproportionately impacted by tariffs, with a $40 million effect on margins [59][112] - SG&A pressures are driven by higher healthcare costs and strategic investments [91] Question: Digital platform improvements and expectations - The digital platform is not meeting standards, but improvements are expected with a new app and mobile web relaunch [76][80] - Management is focused on capturing new consumers through enhanced digital experiences [76] Question: Future wholesale opportunities and campus store contributions - Contributions from campus bookstores are included in full-year guidance, targeting younger consumers [89] - Future wholesale opportunities are being explored strategically [90] Question: Fragrance and body care performance - Body care was disappointing, but the category remains a priority for innovation [96] - The Disney partnership is expected to enhance storytelling and consumer engagement [100]

Financial Data and Key Metrics Changes - The company reported net sales of $1.5 billion, an increase of 1.5% compared to the prior year, achieving results at the high end of guidance [24][29] - Adjusted earnings per diluted share were $0.37, also at the high end of guidance [24] - Gross profit rate improved to 41.3%, up 30 basis points year-over-year, despite a $16 million headwind from tariffs [32] - Adjusted SG&A as a percentage of net sales was 30.2%, representing a 110 basis point deleverage compared to the prior year [32] Business Line Data and Key Metrics Changes - The sanitizer business performed well, with positive consumer response to new products [26] - Men's business showed growth, particularly highlighted during Father's Day [26] - Body Care category was disappointing, down low single digits, with stronger results during the semiannual sale [94] Market Data and Key Metrics Changes - U.S. and Canadian stores net sales totaled $1.2 billion, a 5% increase versus the prior year [30] - Direct net sales were $267 million, a decrease of 10% compared to last year, but down only 3% when adjusted for Buy Online Pickup in Store [30] - International net sales were $86 million, a decline of 3%, attributed to timing of shipments [31] Company Strategy and Development Direction - The company aims to position itself as a global leader in home fragrance and personal care, focusing on product innovation and alternative distribution [8][11] - A multi-year partnership with Disney was announced, building on previous successful collaborations [12] - The company is enhancing its digital platform to improve consumer experience and drive sales [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are cautious and value-seeking, prioritizing purchases that support personal well-being [5] - The company is confident in its ability to absorb tariff impacts and is focused on mitigating costs through strategic sourcing and operational efficiencies [36][56] - Management expressed optimism about the potential for growth, particularly in digital channels and new consumer engagement strategies [60][74] Other Important Information - The company plans to increase share repurchases from $300 million to $400 million [39] - Capital expenditures for the year are expected to be between $250 million and $270 million, focusing on real estate and technology [39] Q&A Session Summary Question: Assessment of opportunities ahead and traffic trends - Management sees more opportunities for growth than initially expected, with a focus on digital platforms and product efficacy [42] - Traffic was up in Q2, with June being particularly strong, while July normalized after the Halloween launch [48] Question: Marketing changes and customer response - Marketing efforts are shifting to focus on emotional connections rather than pricing, with positive consumer responses noted [51][52] Question: Tariff impact between Q3 and Q4 - Q3 is expected to be disproportionately impacted by tariffs, with a $40 million effect on margins [56] Question: Contribution from campus stores and future wholesale opportunities - The campus bookstore initiative is seen as a strategic move to reach younger consumers, with further distribution opportunities being explored [88] Question: Drivers of SG&A deleverage - SG&A pressure is attributed to higher healthcare costs and strategic investments, with ongoing efforts to offset these impacts [90] Question: Digital business outlook and improvements - The digital platform is not meeting expectations, but improvements are underway, including a new app and enhanced online experience [74][75]

Core Insights - Bath & Body Works (BBWI) reported quarterly earnings of $0.37 per share, matching the Zacks Consensus Estimate, and consistent with the previous year's earnings of $0.37 per share [1] - The company posted revenues of $1.55 billion for the quarter ended July 2025, slightly missing the Zacks Consensus Estimate by 0.29%, but showing a year-over-year increase from $1.53 billion [2] - Bath & Body Works shares have declined approximately 18.7% year-to-date, contrasting with the S&P 500's gain of 10.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.49 on projected revenues of $1.64 billion, while the estimate for the current fiscal year is $3.46 on revenues of $7.48 billion [7] - The estimate revisions trend for Bath & Body Works was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Retail - Miscellaneous industry, to which Bath & Body Works belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Net sales reached $1.5 billion, a 1.5% increase year-over-year, hitting the high end of guidance[28, 57, 60] - Gross profit rate improved by 30 basis points to 41.3%[28, 57] - Adjusted operating income was $172 million, a 6% decrease year-over-year[28] - Adjusted earnings per diluted share were $0.37, flat compared to the previous year[28] Channel Performance - Store sales in the U S and Canada accounted for 77% of net sales, totaling $1.2 billion, a 5% increase year-over-year[53, 55] - Direct sales in the U S and Canada represented 17% of net sales, amounting to $267 million, a 10% decrease year-over-year[53, 55] - International sales contributed 6% of net sales, totaling $86 million, a 3% decrease year-over-year, while international system-wide retail sales increased by 9%[54, 55] Loyalty Program - Over 80% of U S sales in Q2 2025 were driven by loyalty members, a 2 percentage point increase year-over-year[50] - The company has approximately 39 million active loyalty members, a 5% increase year-over-year[50] Full Year 2025 Guidance - Net sales are projected to increase by 1.5% to 2.7%[63, 66] - Adjusted earnings per diluted share are expected to be between $3.35 and $3.60[29, 63, 66] - The company plans to increase share repurchases to $400 million, up from the previous guidance of $300 million[66, 69]

Core Viewpoint - Bath & Body Works reported second-quarter profits that fell short of Wall Street expectations, facing challenges from uncertain consumer discretionary spending and rising costs [1] Group 1: Financial Performance - The company's adjusted earnings per share for the quarter were 37 cents, below the analyst average expectation of 38 cents [3] - Quarterly net sales amounted to $1.55 billion, in line with market expectations [3] - General management and store operating expenses reached $483 million, a 9% increase compared to the same period last year [3] Group 2: Market Challenges - The company is experiencing significant operational pressure due to inflation and the negative impact of trade policies from the Trump administration, leading consumers to cut back on spending [2] - Although consumer spending increased in June and July, growth in the third quarter is expected to be constrained by a weak labor market and rising commodity prices [2] Group 3: Strategic Initiatives - To position its products as "affordable luxuries" and "ideal gifts," Bath & Body Works has intensified marketing and promotional efforts, including launching a Disney villain-themed product line aimed at Halloween sales [2] - The company has narrowed its full-year adjusted earnings per share guidance to a range of $3.35 to $3.60, previously $3.25 to $3.60, considering current tariff levels [3] Group 4: Supply Chain Insights - Unlike many peers, Bath & Body Works primarily utilizes local sourcing for most of its products, which helps mitigate tariff impacts [3] - However, approximately 10% of the company's supply chain still relies on China, with Canada and Mexico accounting for about 7% combined, with nearly equal shares [3]

Exhibit 99.1 Bath & Body Works Reports 2025 Second Quarter Results and Updates Fiscal Year 2025 Guidance COLUMBUS, Ohio – August 28, 2025 – Bath & Body Works, Inc. (NYSE: BBWI) today reported second quarter 2025 results. Daniel Heaf, chief executive officer of Bath & Body Works, commented, "Our team delivered a solid quarter, with revenue and adjusted earnings per share at the high end of our guidance range. Based on our strong first- half results and our confidence in our outlook, we are raising the low en ...

Second quarter net sales up 1.5% to $1.5 billion, at the high end of the guidance rangeEarnings per diluted share of $0.30; adjusted earnings per diluted share of $0.37, at the high end of the guidance range Full-year 2025 earnings per diluted share guidance of $3.28 to $3.53; raising the low end of adjusted earnings per diluted share guidance from $3.25 to $3.60 to $3.35 to $3.60, inclusive of current tariff rates Company delivered early progress on three strategic no-regret moves to accelerate near-term g ...