Bath & Body Works Reports 3.2% Decrease in Net Sales for Q1 Fiscal 2026

Bath & Body Works, Inc. reported a decrease in net sales for the first quarter of fiscal 2026, totaling $1,378 million, down 3.2% from $1,424 million in the same period last year. The decline was primarily attributed to a decrease in transactions, although this was partially offset by an increase in average dollar sales. The company's gross profit also fell to $587 million, a decrease of $59 million compared to the previous year, resulting in a gross profit margin of 42.6%, down from 45.4%. Operating income increased to $231 million, reflecting a 10.4% rise from $209 million in the first quarter of 2025, largely due to reduced general, administrative, and store operating expenses, which included an $88 million pre-tax gain from settlements related to payment card interchange fee litigation.

In terms of operational metrics, Bath & Body Works experienced a decrease in customer transactions, which contributed to the decline in sales. The company operated 1,810 stores in the U.S. and Canada as of May 2, 2026, a net decrease of four stores from the previous quarter. However, international operations saw growth, with net sales from international and other sources increasing by 9.0% to $70 million. The company’s total assets stood at $4,963 million, a slight decrease from $5,069 million at the end of the previous fiscal period, while total liabilities decreased to $6,094 million from $6,350 million.

The company has been implementing its "Consumer First Formula," a multi-year transformation plan aimed at revitalizing the brand and attracting younger consumers. Early consumer responses have been positive, and the company anticipates that the impact of these initiatives will become more evident throughout 2026 and into 2027. Additionally, Bath & Body Works has made strategic financial moves, including the early extinguishment of $284 million in senior notes, which resulted in a pre-tax loss of $8 million.

Looking ahead, Bath & Body Works faces macroeconomic challenges, including rising global inflation and input costs due to geopolitical tensions affecting energy markets. The company has not yet recognized potential refunds related to tariffs imposed under the International Emergency Economic Powers Act, as the timing and amount remain uncertain. Despite these challenges, Bath & Body Works maintains a positive outlook, supported by its liquidity position and ongoing investments in capital expenditures, which are expected to total approximately $270 million in 2026, focusing on high-return real estate and enhancements to logistics and fulfillment capabilities.