Bath & Body Works 2nd Quarter Webcast HERE
I shared a post yesterday, and I am going through my notes for more of the details. The link below takes you to the webcast. You add your name and email address and it plays.
Melissa: Operator
Luke Long: Gives the Welcome
Daniel: Begins
2026 is an investment year. Building consideration and trust with new consumers.
Talks about Fruit Fusion. More Functioning Packaging - New Moisturizing Packaging with a pump and more product. Fruit Fusion is designed an enduring franchise not a seasonal collection- and they plan to build on its success through additional fragrances in September '26 and product forms extensions in 2027.
Everyday Luxuries performed ahead of their expectations. And contributed to the sequential improvement to body care. Second half of 2026 will build on the momentum with higher fragrances loads and New Eau de Parfum form and five new fragrances.
In the Second Half - A Thousand Wishes will demonstrate how they are modernizing and extending their most iconic fragrances. Enhance fragrance performance, elevate packaging and expand the franchise with a new fragrance flanker: A THOUSAND WISHES GRANTED.
Designed to recruit new consumers while staying true to what customers love about the original.
In Quarter 3 - will introduce new franchise platforms across body care and home fragrance. The Reserve Collection, which launched on Monday, brings a more elevated design led proposition to home fragrance including a new four-wick candle and liquid-less reed diffusers.
New platforms begin at a seed scale. They are designed to build brand equity, test new consumer propositions, and establish the platforms that will scale over time. Consumer response will help determine where they invest and which they will scale in 2027.
Greater focus also means being clear where they chose not to compete. As part of that ongoing discipline. they have decided to exit Home Care, which includes Laundry and Kitchen Products.
Reigniting the Brand. They have always been grounded in a simple belief --- Everybody Deserves to Feel Good. Inspired by the optimism, warmth, and creativity of the American spirit, they create sensorial products and experiences for everybody. Giving the brand a distinctive and broadly relevant place in consumers lives.
To bring this brand promise to life more consistently they are building a modern demand creation model that connects the most important product stories with relevant talent, creative content, and culture.
Fruit Fusion provided their first example of this model in the 2nd quarter. It was the first time BBW teamed up with a celebrity at this scale with Hillary Duff serving as an ambassador and creative partner. As a longtime fan of B&BW with relevance across generations she brought a genuine affinity of the brand to the partnership. They amplified the launch through coordinated creator led campaign, another first for the brand. The campaign generated approx. 615 million impressions and contributed to over 50,000 new social followers. Bringing B&BW into the cultural conversation with new audiences.
The launch is also a repeatable playbook. They intend to continue to apply this demand creation model behind their most important product launches in the second half.
One component about playbook they are now scaling is creator activation. Creator interests in working with B&BW is strong. Giving them an efficient way to tell their stories authentically. They have significantly expanded their creator network and expect to mobilize thousands of creators across a range of audience sizes to support their holiday campaign.
Looking ahead, Consumers will see fewer, bigger, and more coordinated brand moments that brings together product innovation, talent, creator content, and seasonal Storytime.
Winning in the Marketplace. Across digital and expanded distribution, they continue to see some of the clearest signs of progress. Their own digital business returned to growth in the quarter improving 4 percentage points sequentially from Q1. They expected digital to be among the first areas where the consumer first formula would translate into measurable results.
The return to growth coupled with increases in new, existing, and reactivated digital customers provide early evidence that stronger product storytelling, improved discovery, personalization, and demand creation, are beginning to work in helping them reach consumers beyond their existing customer base.
This progress is particularly meaningful since they have not grown their E-Commerce business since 2021. Leaving a significant opportunity to capture a greater share of the category growth over time.
Expanded Distribution was another area of measurable progress in the quarter. Amazon continues to scale quickly with net sales more than tripling compared to the first quarter. They are one of the largest candle brands on the platform. Add more category spending shifts to Amazon over time their presence allows them to meet consumers where they are already shopping and participate in that growth.
The channel is attracting a higher mix of new-to-brand consumers who skew younger and more affluent, while delivering a higher AUR than their own channel. Reinforcing their confidence that Amazon can expand their reach and drive incremental growth.
During the second quarter they launched with ULTA Beauty across approx.600 stores creating new points of discovery for the brand within specialty beauty. While still early, the initial response has been encouraging. And supports their belief that thoughtfully selected partnerships can help introduce B&BW to new consumers.
Together, Amazon and ULTA expand discovery. Broadening their reach and reinforcing a consistent brand across channels while maintaining their strength and distinctiveness of their own channel.
During the second quarter they completed a merchandising reset across their full store fleet. The first in a series of improvements to the existing store experience. Clearer signage and more intuitive layout organized by fragrance, form, and franchise are designed to make their assortment easier to understand and products easier to discover.
Initial feedback from consumers and associates has been positive and they will continue to evolve the door experience to improve new consumer acquisitions, conversions, and store productivity.
International. Despite continued conflicts in the Middle East, international retail sales increased 9% versus last year. They are pleased with the early performance in Brazil which opened in July.
Finally, operating with speed and efficiency. Supporting all of this work is their continued focus on simplification, speed, and disciplined execution. Through fuel for growth, and broader operational improvement they are creating capacity to reinvest behind innovation, marketing, digital capability, and marketplace expansion - while strengthening the long-term foundation of the business.
CEO Thanks the Associates. For their continued dedication to serving customers and advancing their strategy. The progress they are making is a reflection of their commitment and hard work.
The second quarter provided evidence that the Consumer First Formula is beginning to work. With progress in digital, encouraging early reads from product innovation, growth in expanded distribution and continued improvement. in several of their strategic indicators.
Tom. Reviews 2nd Quarter Results.
They entered into June SAS with lower levels of clearance inventory than last year, while that is healthy for the overall brand in business -- it represented approx.1 point of headwind into second quarter sales with impacts across all categories.
Body Care declined mid-single digits. While performance improved sequentially from Q1 supported by strength in the Everyday Luxuries franchise and the Fruit Fusion launch, results remain below their expectations. They will continue to invest in product innovation while increasing focus on merchandising and marketing in this critical category.
Home Fragrance declined low single digits -- performance was driven by a strategic reduction in Halloween assortment as well as less clearance product as referenced previously. Partially offset by strength in single wick candles and Wallflower heaters.
Soaps and sanitizers were flat in the quarter. Innovations remain a source of strength within the category. Their newer moisturizing and revitalize soap formulas continue to perform well and continue to drive strong AUR performance in those forms.
Real Estate: During the Quarter
Opened primarily off mall - 24 stores
Closed 10 stores in malls
International Stores - opened 17
Ended the Quarter - 1.937 North America company owned stores, approx. 60% of fleet in off mall locations. 596 International locations.
Questions.
Citi Bank
Wells Fargo
Bank of America
Gugenheim
JP Morgan
Barclay
Morgan Stanley
Goldman Sachs
*Tariff Refunds Q2 - Received 80 million covering forward - guidance for second half, covering forward tariff and input cost pressures of approx.30 million based on what was known at the end of Q2. Specifically assumed that Canada tariffs remained at 50% for the balance of the year. As a reminder, they do have production in Canada primarily in Candles that represent approx. 3% of total cost of goods. Also have a large Canada retail business. There is exposure to retaliatory tariffs if applied to their categories. Still evaluating this in real time, and working hard to mitigate those risks through sourcing, assortment, and pricing opportunities.
In addition to the forward tariffs, they have increased investment into the Consumer First Formula of about 35 million that's primarily marketing, to accelerate their transformation. The majority of that investment about 70% is pointed at Q3 ahead of the Holiday Peak season, which should support both Q3 and Q4.
*Key Learnings from Fruit Fusions / Hillary Duff - Off to a strong start. Exceeded sales and expectations in the quarter. Several forms sold out and supply chains are working hard to replenish that inventory. Fruit Fusions stands for more than just a product launch and is the Consumer First Formula in action - Demonstrated a repeatable go to market playbook that they will use time and time again. Starts with product, took trend right fragrances and real skin care benefits with more value for the consumer. Built a bigger story around it with Hillary Duff, improved social creators, and coordinated execution across their own channels, stores, and digital and on Amazon. Create products that people want, tell stories that people remember and make it easier to discover and buy.
Franchise Management. Fruit Fusions adding two new fragrances in Q3, new additional forms in 2027. Supporting in marketing investment.
*Key Learnings from Amazon and ULTA - Is it cannibalizing on their own? ULTA is a best-in-class specialty beauty retailer. Strong reaction to trial size and gifting. Exciting plans with ULTA in the upcoming Holiday period. Each partnership has a distinctive strategic need - Amazon is about convivence and ULTA is about trial and discovery in a specialty beauty environment. Not observed any cannibalization on any of their channels, they continue to prove every quarter.
*Free Ship $50 - Consumers are choosing shipping over BOPIS, they expected it shift out of stores into digital. They planned for the loss towards shipping revenues in line with what they thought.
*Low Level Impact of Merchandise on SAS - How to feed the role of SAS going forward. They deliberately went into SAS with a little bit less distressed inventory. They are buying their seasonal business correctly. Not looking to buy large amounts of inventory to flush through SAS. They are protecting drivers of growth.
Those Sales are a very important driver of business. Not looking to pull those sales away from the business and from the consumer, don't intend to be increasingly promotional in the back half of the year.
Can't promote a business back to health. Using brand marketing and product as things they are leaning on to drive growth in the back half of the year.
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