Bath & Body Works (ticker: BBWI) reported strong earnings and sales for the third quarter, surpassing analysts’ expectations. However, the company’s guidance for the fourth quarter and fiscal 2023 did not meet analysts’ projections, causing its shares to decline.
Stellar Q3 Performance
According to FactSet, Bath & Body Works recorded third-quarter earnings of 52 cents per share, exceeding Wall Street’s estimate of 34 cents per share. Adjusted earnings also outperformed expectations at 48 cents per share, compared to the projected 35 cents per share. The company’s sales of $1.56 billion were slightly higher than the estimated $1.55 billion.
CEO Gina Boswell expressed optimism about the upcoming holiday season, emphasizing the team’s dedication to providing customers with an exceptional omnichannel experience and a diverse product range.
Concerns for Q4
Despite the impressive results in Q3, Bath & Body Works anticipates a decline in net sales of 1% to 5% compared to the previous year’s fourth quarter. Analysts had anticipated stronger numbers, leading to some disappointment. The company’s estimated earnings for Q4 are expected to range between $1.70 and $1.90 per share, falling short of analysts’ forecast of $1.98.
Outlook for Fiscal 2023
Looking ahead to fiscal 2023, Bath & Body Works expects a sales decline between 2.5% and 4% compared to the previous year. The company also adjusted its earnings forecast to be between $2.99 and $3.19 per share. Analysts’ projections were slightly lower, with full-year EPS expected to be around $3.06.
Market Reaction
The market responded negatively to Bath & Body Works’ guidance update, with the stock falling 2.3% to $31.55 in premarket trading. The company’s shares have already experienced a 23% decline leading up to Thursday’s session.
It remains to be seen how Bath & Body Works will navigate the upcoming challenges and deliver results that meet or exceed market expectations.
