Bath & Body Works missed Wall Street’s sales forecast in its second quarter and lowered its full-year outlook amid a challenging backdrop of economic uncertainty and consumers tightening their purse strings. The news sent its stock price down 7 percent.
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The company reported net sales of $1.53 billion for the quarter ended Aug. 3, a decrease of 2.1 percent from a year earlier. Analysts had estimated $1.54 billion.
Adjusted earnings per diluted share for the second quarter were 37 cents, compared to 40 cents last year and a touch above Wall Street’s forecast of 36 cents. Adjusted net income was $83 million compared to $92 million last year.
For fiscal 2024, the company updated its guidance and now expects net sales to range between a decline of 4 percent to a decline of 2 percent, compared with its previous forecast of a 2.5 percent drop to flat.
Full-year 2024 adjusted earnings per diluted share are now expected to be between $3.06 and $3.26, compared to adjusted earnings per diluted share of $3.27 in fiscal 2023.
“Taking all factors into account, including first-half sales trends and the choppier macro environment as we look ahead to the remainder of the year, we believe it is prudent to adjust our full-year revenue and earnings expectations,” said chief executive officer Gina Boswell during a call with analysts. “While I’m dissatisfied with the pace of our return to sales growth, I remain confident in our strategy and the progress we are making.”
Providing more color on the second quarter, president Julie Rosen told analysts that the semiannual sale “did not perform to our expectations, and while it affected performance across all categories, it disproportionately affected body care.” In particular, she noted that store presentation and marketing did not initially resonate with our customers.
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There were some bright spots, however, with the men’s business continuing to be one of its fastest-growing categories in body care.
Lip also continued to attract a younger customer while also doubling sales of lip in those stores year to date.
Laundry, meanwhile, will roll out to all U.S. stores by the end of September, accompanied by the launch of a national advertising campaign to accelerate customer awareness and adoption.
Bath & Body Works is also continuing with international expansion, recently opening stores in South Korea and London.
“International markets remain an attractive pillar of our strategy,” Boswell said. “We believe there is tremendous growth opportunity as we enter new markets and expand in existing markets. International systemwide retail sales grew double digits in the second quarter in the areas not affected by the war” in the Middle East.
Its stock price closed down 7 percent, or $2.43, to $32.29.
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