Bath & Body Works Downgrades Forecasts, Citing Dips in Foot Traffic
Shares in Bath & Body Works Inc. slid after the retailer downgraded both its second-quarter and full-year forecasts as consumers tighten their belts amid mounting speculation of an economic downturn.
With inflation reaching a 40-year high in the U.S., the company, which will report on Aug. 17, noted that footfall has declined and that some customers, particularly in the lower income bracket, have become more cost-conscious and are limiting purchases or trading down.
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As a result, it expects second-quarter sales to be down 6 to 7 percent compared to last year, versus its previous guidance for a low-single-digit percent increase. Earnings from continuing operations per diluted share are forecast to be 40 cents to 42 cents, lower than its previous guidance of 60 cents to 65 cents. The company estimates the full-year operating income rate as a percentage of sales to be in the midteens.
“Our business continues to perform at levels significantly above pre-pandemic, although we are navigating a challenging operating and macroeconomic environment with inflationary pressure affecting our customers and our business,” Sarah Nash, executive chair and interim chief executive officer, said. “We are focused on driving improved merchandise margins and pursuing aggressive options to control costs and combat inflationary pressures.”
In August 2021, the former L Brands split into two companies — Victoria’s Secret and Bath & Body Works — and each company began trading individually on the New York Stock Exchange. The latter is still searching for a permanent CEO after Andrew M. Meslow’s departure due to health reasons.
At midday, shares in the company were down close to 2 percent at $29.61. At one point during morning trading they tumbled as much as 8 percent.
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