Bath & Body Works Reports Q4 Beat, but Issues Lower FY26 Adjusted EPS Guidance and Halts Buybacks
Summary
Bath & Body Works exceeded Q4 expectations but provided a weaker full-year 2026 adjusted earnings per share outlook and announced no share repurchases for the year, despite strong Q1 GAAP EPS guidance driven by one-time gains.
Key Events
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Q4 2025 Results Exceed Guidance
The company reported net sales of $2.72 billion (down 2% year-over-year) and adjusted diluted EPS of $2.05 for the fourth quarter of 2025, surpassing its previous guidance.
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Mixed Q1 2026 Guidance
Bath & Body Works forecasts Q1 2026 GAAP diluted EPS of $0.84-$0.90 (up from $0.49 in Q1 2025), but adjusted diluted EPS is expected to be $0.24-$0.30 (down from $0.49 in Q1 2025), with net sales projected to decline 6%-4%.
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Lower Full-Year 2026 Adjusted EPS Outlook
The company projects full-year 2026 adjusted diluted EPS of $2.40-$2.65, a significant decrease from $3.21 in fiscal 2025, alongside a net sales decline of 4.5%-2.5%.
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Cessation of Share Repurchases
After repurchasing $400 million in shares during fiscal 2025, the company's 2026 outlook assumes no further share repurchases.
Analysis
Bath & Body Works reported fourth-quarter results that exceeded its own guidance, and provided strong GAAP earnings per share guidance for Q1 2026, largely driven by one-time gains from a litigation settlement and tax benefits. However, the underlying operational outlook is weaker, with full-year 2026 adjusted EPS guidance significantly below fiscal 2025 levels and a forecast for declining net sales. Furthermore, the company's 2026 outlook assumes no share repurchases, a notable shift after repurchasing $400 million in shares during fiscal 2025. This combination of a Q4 beat with a cautious, operationally weaker forward outlook and a change in capital allocation strategy presents a mixed but predominantly negative signal for investors, indicating ongoing challenges despite strategic transformation efforts.
At the time of this filing, BBWI was trading at $23.34 on NYSE in the Trade & Services sector, with a market capitalization of approximately $4.6B. The 52-week trading range was $14.28 to $36.89. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.