Bath & Body Works shares came down as the retailer cut its profit outlook

Bath & Body Works shares came down as the retailer cut its profit outlook

September 2, 2022:- Bath & Body Works claims came down in after-hours trading Wednesday after the retailer cut its profit outlook due to expected increases in inflationary pressures.

After hours, the stock decreased over 5% after an 8.6% decline during the trading day, between a broader market selloff.

The company says in prepared remarks that it has been facing higher costs of raw materials, transportation, and wages, such as many retailers. Bath & Body Works expects to hit between $225 million and $250 million from inflation this year, or almost $75 million more than the plan.

The comments followed big-box retailers Target and Walmart reported that these expenses ate into their profits in the recent quarter, thereby denting their guidance for the future months.

Bath & Body Works, selling lotions, candles, and different bath soaps, is forecasting this year’s 2022 earnings from continuing operations for each diluted share to be between $3.80 and $4.15, compared with a previous range of $4.30 to $4.70.

Its second-quarter earnings for each share are expected to be between 60 and 65 cents, compared with 77 cents a year earlier.

For the three months ended April 30, Bath & Body Works reported a net income of $154.9 million, or 64 cents for each share, compared with revenue of $276.6 million, or 97 cents for each share, a year earlier.

That topped analysts’ estimates for 53 cents a share, according to a Refinitiv survey.

Sales decrease slightly to $1.45 billion from $1.47 billion earlier. But revenue beat expectations by $1.43 billion.

Bath & Body Works said it would be investing this year to revamp its loyalty program and test a new line-up of products, including hair care. While those investments can help drum up demand from customers, they can also pressure profits in the near term. Bath & Body Works shares are down by 39% this year.