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24 Aug

Bath & Body Works’ Sales Decline in Q2 –

The rising popularity of fragrance plug-ins and the introduction of men’s grooming weren’t enough to forestall Bath & Body Works’ sales from sliding in its second quarter, although earnings performed higher than expected.

Despite it looking increasingly likely that the U.S. will avoid a recession within the near term, Gina Boswell, the retailer’s newly minted chief executive officer, told analysts that customers tightened their purse strings through the quarter amid economic uncertainty. The remark mirrored that of other leading retail CEOs in recent days, from Macy’s Inc. to Kohl’s Inc.

“As expected, we proceed to see some pressure on basket size through the quarter,” Boswell said. “To be clear, we aren’t seeing any trade down in our business, but we’ve observed that the shopper is rigorously managing their spending against the backdrop of a difficult macroeconomic environment.”

The corporate reported net sales of $1.56 billion for the second quarter ended July 29, down 3.6 percent in comparison with the identical period a 12 months earlier, but in step with Wall Street forecasts. Shares rose by 3.8 percent to $36.25 on Wednesday.

In consequence, for fiscal 2023, the corporate expects net sales to say no 1.5 to three.5 percent, after previously forecasting that sales would see flat to a midsingle-digit growth.

Bath & Body Works’ sentiments chimed in with industry data showing that customers within the mass market have been cautious amid high inflation, rising rates of interest and uncertainty over the cancellation of student debt.

Weakness was reported in Bath & Body Works’ home fragrance and soaps and sanitizers categories, which each declined versus last 12 months. Sales for the house fragrance and soaps and sanitizers categories represent just over half of the business.

Specifically, it faced pressure in candles because the category continues to normalize post-pandemic. 

As an alternative, wallflower fragrances once more outperformed candles as customers are spending less time at home.

Other vibrant spots were men’s grooming, which launched originally of the quarter and exceeded Bath & Body Works’ expectations. After launching beard care, it is going to debut men’s hair and shave next month. 

It would also launch laundry this month across a limited variety of stores and online.

Adjusted second-quarter earnings per diluted share were 40 cents and adjusted net income was $92 million. Analysts had penciled in 33 cents.

For fiscal 2023, the corporate is anticipating that adjusted earnings per diluted share will are available in at between $2.80 and $3.10. It previously forecast a variety of $2.68 to $3.08.

The corporate was formed in August 2021 when the previous L Brands split into two entities: Victoria’s Secret and Bath & Body Works. Each company trades individually on the Recent York Stock Exchange. Bath & Body Works was number 11 on WWD Beauty Inc’s most up-to-date Top 100 Beauty Manufacturers list, with $4.6 billion in sales for calendar 2022.

Most recently, it faced a proxy challenge from activist investor Third Point, however the two parties quickly reached an agreement. 

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