- Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating on the shares of Bath & Body Works Inc BBWI with a price target of $52.
- BBWI reported 1Q23 EPS of $0.33 versus $0.64 last year, coming in ahead of the consensus of $0.26 and guidance of $0.17-$0.27.
- The analysts said that the earnings upside was largely driven by better-than-expected gross margin deleverage, while sales also came ahead of the consensus.
- Below the topline, ongoing work to improve merchandise margins helped drive the stronger gross margin, while expenses remain well-controlled, added the analyst.
- Following a strong Q1, BBWI raised its annual EPS outlook, an encouraging sign given ongoing macro challenges, particularly when compared to many retail peers that have recently reported.
- While Q2 EPS guidance appears conservative, touching consensus at the high-end, the analyst views this approach as prudent given near-term uncertainties.
- Overall, the analyst continues to see BBWI as an established brand with a loyal customer base within an increasingly attractive consumer space characterized by strong purchase frequency of a consumable category.
- With the recent rollout of its new loyalty program, increased investments in infrastructure and systems, and efforts to streamline operations and the organization, the analyst thinks the company can build a stronger foundation to drive incremental growth and profitability longer term.
- Price Action: BBWI shares are trading higher by 8.88% at $37.04 on the last check Thursday.
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