Bath & Body Works Surpasses Wall Street Forecasts in Q1, but Guidance Disappoints
Updated June 4 at 4:25 p.m. EDT
Bath & Body Works beat Wall Street forecasts in its first quarter, but the retailer’s guidance fell short of expectations.
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The company reported net sales of $1.38 billion for the quarter ended May 4, a decrease of 0.9 percent compared to $1.39 billion for the same period last year. Wall Street had expected $1.37 billion.
Adjusted earnings per diluted share increased 15 percent to 38 cents compared to 33 cents last year, and net income was $87 million, up from $76 million. Analysts had forecast 33 cents.
The company expects second-quarter net sales to range between a decline of 2 percent to flat and for diluted earnings per share to range between 31 cents and 36 cents.
For fiscal 2024, Bath & Body Works narrowed its guidance by raising the midpoint for both the top and bottom lines and is now forecasting net sales to range between a decline of 2.5 percent to flat. Full-year 2024 earnings per diluted share is now expected to be between $3.05 and $3.35.
This sent the company’s share price falling almost 13 percent to close at $45.17 Tuesday.
Neil Saunders, managing director of GlobalData, said: “Unfortunately, despite the fact Bath & Body Works is lapping soft prior-year numbers, future guidance calls for full-year sales to be flat to down by 2.5 percent. This comes off the back of an additional week of trade last year but, even so, it is not an entirely convincing performance. When compared to the projected growth in the categories Bath & Body Works sells, these kind of numbers represent a loss of market share.”
The first-quarter results showed that body care sales grew low-single digits in the quarter, candle sales declined, air fresheners or wallflowers grew unit share in the quarter, and the soaps and sanitizers category decreased low-single digits.
On a geographical basis, its international business was pressured due to the war in the Middle East.
“This is directly affected by the war in the Middle East. If you remove the regions affected by the war, it’s quite a healthy growing business with system-wide retail sales in the teens in the first quarter,” said chief executive officer Gina Boswell.
It plans to continue with international expansion plans, adding at least 35 net new stores in this year, having recently opened its first stand-alone store in London and in South Korea.
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