Bath & Body Works Inc (NYSE:BBWI) reported a second-quarter FY23 sales decline of 3.6% year-on-year to $1.56 billion, missing the analyst consensus of $1.57 billion.

Revenue from the U.S. and Canada stores decreased 1% Y/Y to $1.14 billion, International stores fell 4% to $86 million, while Direct sales declined 10% to $329 million.

Gross profit decreased 5.8% Y/Y to $622 million with a margin of 39.8%.

The operating margin was 12.1%, and operating income for the quarter rose 22.3% to $188 million.

Adjusted EPS of $0.40 beat the analyst consensus of $0.33.

Bath & Body Works held $790 million in cash and equivalents as of July 29, 2023. At the end of Q2, inventories declined 15.7% Y/Y to $818 million.

As of July 29, the company had 1,823 stores compared to 1,802 stores in January.

Outlook: Bath & Body Works sees Q3 FY23 EPS of $0.30-$0.40 versus the consensus of $0.37. It expects Q3 sales to decline 2.5% - 4%.

It sees FY23 FY23 sales to decline 1.5% - 3.5% (prior flat to mid-single-digit decline). It raised FY23 adjusted EPS guidance from $2.68 - $3.08 to $2.80 - $3.10, versus the consensus estimate of $2.99.

Price Action: BBWI shares are trading higher by 1.46% at $35.44 on the last check Wednesday.