Why Specialty Retailer Bath & Body Works' Stock Is Sliding Today

Bath & Body Works Inc BBWI reported a third-quarter FY23 sales decline of 2.7% year-on-year to $1.562 billion, marginally beating the analyst consensus estimate of $1.560 billion.

Revenue from the U.S. and Canada stores decreased 1% Y/Y to $1.17 billion, International stores fell 5% to $77 million, while Direct sales (U.S. and Canada) declined 8% to $317 million.

Gross profit rose 0.6% Y/Y to $682 million with a margin of 43.7%. The operating margin was 14.1%, and operating income for the quarter rose 9.4% to $221 million.

Adjusted EPS of $0.48 beat the consensus estimate of $0.35.

Bath & Body Works held $412 million in cash and equivalents as of Oct. 28, 2023. At the end of Q3, inventories declined 5% Y/Y to $1.2 billion.

As of Oct. 28, the company had 1,843 stores compared to 1,802 in January.

"Our performance in the quarter was marked by strong merchandise margin improvement and the ongoing benefits of our cost optimization initiatives," said CEO Gina Boswell.

Bath & Body Works' regular quarterly dividend of $0.20 per share is payable on Dec. 1, 2023, to shareholders of record at the close of business on Nov. 17, 2023.

Outlook: Bath & Body Works sees Q4 FY23 EPS of $1.70-$1.90 versus the consensus of $1.98. It expects Q4 sales to decline 1% - 5%.

It sees FY23 sales to decline 2.5% - 4% (prior 1.5% - 3.5% decline). It revised FY23 adjusted EPS guidance from $2.80 - $3.10 to $2.90 - $3.10, versus the consensus of $3.07.

Price Action: BBWI shares are trading lower by 5.03% at $30.67 on the last check Thursday.