Why Bath & Body Works Shares Are Falling Today

Bath & Body Works, Inc.BBWI shares are trading lower after the company reported fourth-quarter earnings and issued modest first quarter and FY24 outlook. 

The company reported fourth-quarter adjusted earnings per share of $2.06, beating the analyst consensus of $1.87. Quarterly revenues of $2.912 billion beat the street view of $2.84 billion.

Quarterly results gained from strong execution during the holiday season and an extra week in the fourth quarter.

Total sales from U.S. and Canadian stores rose 4% year over year to $2.162 billion, while Direct sales (U.S. and Canada) declined 8% to $656 million. International sales fell 1% to $94 million in the quarter under review. 

Gross profit in the quarter under review totaled $1.337 billion, higher than $1.250 billion a year ago. Operating income in the fourth quarter totaled $696 million, higher than $653 million a year ago.

Total Bath & Body Works company-operated stores were 1,850 by February 3, 2024. Bath & Body Works exited the quarter under review with $1.084 billion cash and equivalents. The company’s long-term debt stands at $4.388 billion.

Share Repurchase:  The company approved a new share repurchase program to repurchase up to $500 million of the company’s outstanding shares of common stock.

Outlook: Bath & Body Works is forecasting net sales to range between a decline of 3.0% to flat relative to $7.429 billion of net sales in fiscal 2023, resulting in the range of $7.206 billion-$7.429 billion (consensus $7.45 billion. The company projects full-year earnings per share of $3.00-$3.35 versus the $3.34 estimate.

The company’s full-year outlook includes the anticipated impact of approximately $300 million of cash deployed toward share repurchases.

The company expects first-quarter 2024 net sales to decline 4.5% to 2.0% compared to $1.396 billion in 2023, resulting in the range of $1.333 billion-$1.368 billion (consensus $1.38 billion). Bath & Body Works forecasts first-quarter earnings per share of $0.28-$0.33 versus the $0.39 estimate.

Price Action: BBWI shares are trading lower by 8.55% to $44.20 premarket on the last check Thursday.

Photo via Wikimedia Commons