Bath & Body Works BBWI posted third-quarter fiscal 2024 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate. Also, both metrics improved year over year.
Innovation across the company's core products, adjacencies and collaborations is resonating with both new and existing customers, supported by strategic investments in marketing and technology.
The company is leveraging its agile business model and predominantly U.S.-based supply chain, positioning itself well to navigate a volatile retail environment and a shorter holiday calendar. As the critical holiday period approaches, there is confidence in the company's strong execution and the momentum being built, all driving toward sustainable and long-term profitable growth.
Bath & Body Works, Inc. Price, Consensus and EPS Surprise
Bath & Body Works, Inc. price-consensus-eps-surprise-chart | Bath & Body Works, Inc. Quote
BBWI’s Quarterly Performance: Key Metrics and Insights
The company reported adjusted earnings of 49 cents per share in the fiscal third quarter and beat the Zacks Consensus Estimate of 46 cents. Also, the figure increased 2.1% from adjusted earnings of 48 cents in the year-ago quarter.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues increased 3.1% year over year to $1,610 million and surpassed the Zacks Consensus Estimate of $1,579 million.
Revenues for Stores - U.S. and Canada increased 4.4% year over year to $1.22 billion, which surpassed the Zacks Consensus Estimate of $1.20 billion. Direct - U.S. and Canada revenues improved 1.5% to $321 million, beating the consensus estimate of $312.3 million. However, International operations’ revenues declined 11.1% to $69 million, which came in line with the Zacks Consensus Estimate.
The gross profit increased 2.6% year over year to $700 million. Meanwhile, the gross margin contracted 20 basis points to 43.5% in the quarter under review. General, administrative and store operating expenses increased 4.6% to $482 million.
Bath & Body Works has reported operating income of $218 million in third-quarter fiscal 2024, down 1.4% from the year-ago quarter. BBWI’s operating margin contracted 60 basis points to 13.5% in the quarter.
Adjusted net income was $106 million, down 3.6% from $110 million reported in the year-ago quarter.
Bath & Body Works’ Store Update
The company ended the quarter with 1,885 stores, wherein it operated 1,773 stores in the United States and 112 stores in Canada. During nine months, it opened 76 stores in total and closed 41 stores.
BBWI’s Financial Health Snapshot
Bath & Body Works ended the quarter with cash and cash equivalents of $191 million, long-term debt of $3.88 billion, and long-term operating lease liabilities of $969 million. In the first nine months of fiscal 2024, the company used $69 million in net cash for operating activities.
Bath & Body Works’ Fiscal 2024 Outlook
The company projects revenues for the 13-week fourth quarter of fiscal 2024 to decline 6.5-4.5% compared with $2.91 billion in the 14-week fourth quarter of fiscal 2023. This forecast includes an anticipated headwind of approximately 500 basis points due to the shifted fiscal calendar, which includes the extra week in fiscal 2023. Earnings per share for the fiscal fourth quarter are expected in the range of $1.94-$2.07 compared with $2.55 in the fourth quarter of 2023, and adjusted earnings per share of $2.06 for the same period.
For fiscal 2024, the company has revised its full-year revenues and earnings guidance upward from the previous forecast provided in August. BBWI’s revenues are now expected to decline 2.5% to 1.7% relative to $7.43 million in fiscal 2023, with the 53rd week in fiscal 2023 contributing a headwind of approximately 100 basis points to fiscal 2024 revenues.
Full-year earnings per share are projected to range between $3.46 and $3.59 compared with $3.84 in fiscal 2023, while adjusted earnings per share are expected to be between $3.15 and $3.28 compared with $3.27 in fiscal 2023. The full-year guidance reflects the anticipated impact of $400 million allocated for share repurchases.
Shares of this Zacks Rank #4 (Sell) company have lost 12.7% in the past three months compared with the industry’s decline of 3.7%.
Key Picks
We have highlighted three better-ranked stocks, namely, Deckers Outdoor Corporation DECK, Bark BARK and Petco Health and Wellness Co. WOOF.
Deckers Outdoor Corporation is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. It sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Deckers’ fiscal 2025 earnings and sales indicates growth of 12.6% and 13.6%, respectively, from fiscal 2024 reported levels. DECK has a trailing four-quarter average earnings surprise of 41.1%.
Bark is a dog-centric company. It is devoted to making dogs happy with the products, services and content. It currently carries a Zacks Rank #2 (Buy).
The consensus estimate for Bark’s current fiscal 2025 earnings and sales indicates growth of 81.8% and 2%, respectively, from fiscal 2024 reported levels. BARK has a trailing four-quarter average earnings surprise of 16.7%.
Petco is a fully integrated health and wellness company for pets. They offer premium products, services and veterinary care. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Petco‘s fiscal 2025 sales indicates decline of 1.9% from the year-ago actuals. WOOF has a negative trailing four-quarter average earnings surprise of 79.2%.
Zacks Investment Research
US
VN
TW
