What Happened:

Shares of personal care and home fragrance retailer Bath & Body Works (NYSE:BBWI) fell 11.8% in the pre-market session after the company reported fourth-quarter results and provided a weak earnings forecast for the next quarter and full year. The sales outlook was also underwhelming as BBWI expects first-quarter revenue to decline 4.5% to 2.0% (vs. expectations for flat growth). Similarly, full-year revenue is expected to range between a decline of 3.0% to flat year-on-year growth. On the other hand, revenue and EPS exceeded expectations during the quarter. However, the topline growth remained weak. To drive more shareholder value, the Board of Directors approved a new share repurchase program authorizing the company to repurchase up to $500 million of the company's common stock. Overall, this was a mixed but weaker quarter for the company.

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What is the market telling us:

Bath and Body Works's shares are somewhat volatile and over the last year have had 8 moves greater than 5%. But moves this big are very rare even for Bath and Body Works and that is indicating to us that this news had a significant impact on the market's perception of the business.

Bath and Body Works is up 1.6% since the beginning of the year, and at $45.46 per share it is trading close to its 52-week high of $48.33 from February 2024. Investors who bought $1,000 worth of Bath and Body Works's shares 5 years ago would now be looking at an investment worth $1,739.

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