Bath & Body Works
was rising in premarket trading on Thursday after it topped earnings expectations. It’s a lift for the soap-and-fragrance retailer which has faced increasing analyst skepticism in recent months amid mounting recession concerns.
Bath & Body Works
(ticker: BBWI) reported earnings per share of 33 cents for the first quarter of 2023, compared with 64 cents for the same period a year earlier. Net sales of about $1.4 billion were down 4% from the year-earlier period.
Analysts had expected earnings of 26 cents a share on sales of $1.39 billion, according to FactSet, which noted that analysts had been lowering their expectations for quarterly earnings leading up to the results.
“We delivered first-quarter sales in line with our expectations while our EPS was better than anticipated as we saw benefits from our work to improve merchandise margin as well as early benefits from our cost optimization initiatives,” CEO Gina Boswell said in a statement.
Bath & Body Works shares were up 12.6% at $38.30 in premarket trading. The stock was down 19% so far this year as of Wednesday’s close, with the company being among retailers profiled by some analysts as at risk from a downturn in consumer spending.
The better-than-expected report also was a welcome sign given that shoppers at other retailers are still shying away from discretionary purchases, particularly in the home goods category.
Bath & Body Works raised its guidance for its full-year earnings per share to a range from $2.70 to $3.10, from between $2.50 and $3 previously. It reiterated a forecast for net sales to range from flat to a mid-single digit decline from $7.56 billion in 2022.
For the second quarter, the company expects sales to fall by a low to mid-single digit percentage and for earnings per share to range from 27 cents to 32 cents.
The midpoint of both those ranges fall below consensus estimates, which call for second-quarter and full-year earnings per share of 32 cents and $2.94, respectively. Nonetheless, “most investors we spoke to expected maintained guidance. As such, the raise, even minor, should lift shares,” wrote BMO Capital Markets analyst Simeon Siegel.
Write to Adam Clark at adam.clark@barrons.com
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