Bath & Body Works BBWI-N forecast full-year profit largely below market estimates on Tuesday and said it expects annual sales to drop, signalling demand for its scented candles and body care products would remain subdued amid sticky inflation.
Shares of the Ohio-based beauty and skin care company fell 8.8 per cent in premarket trading as it also expects second-quarter profit below estimates.
Customers with constrained budgets are still unwilling to spend on expensive non-essential products such as home goods, while they have begun to open their wallets to smaller discretionary items like trendier clothes and accessories.
Results from big-box retailer Target last month also showed shoppers were delaying their purchases, even as they were spending increasingly on out-of-home activities.
The company now expects 2024 net sales to drop 2.5 per cent to flat, compared with its previous forecast of a decline of 3 per cent to flat. Analysts were expecting sales to drop 0.37 per cent.
It sees full-year adjusted earnings per diluted share to be between $3.05 and $3.35, versus a prior projection of $3.00 and $3.35. Analysts were expecting a profit of $3.31 per share, according to LSEG data.
The forecast comes even as Bath & Body Works has tried to offer promotions, increased its marketing efforts and introduced newer products to drive more customers to its stores.
The company sees adjusted earnings per diluted share between 31 cents and 36 cents for the second quarter, below expectations of 39 cents.
However, it expects second-quarter net sales to range between a decline of 2 per cent to flat, with the midpoint above an estimate of a 1.41 per cent drop.
Bath & Body Works’ net sales fell 0.9 per cent, to $1.38-billion in the quarter ended May 4, compared to expectations of $1.37-billion. Excluding items, it earned 38 cents per share, topping an expectation of 33 cents.