Bath & Body Works Inc.’s stock fell 8% early Thursday, after the soap and perfume retailer said it expects earnings to fall in fiscal 2024, overshadowing better-than-expected fourth-quarter numbers.
Columbus, Ohio-based Bath & Body Works, which was spun out of Victoria’s Secret in August of 2021, posted net income of $579 million, or $2.55 a share, for the quarter, up from $434 million, or $1.89 a share, in the year-earlier period.
The profit number included a $112 million tax benefit stemming from the partial release of a valuation allowance on a foreign deferred tax asset, an $8 million pretax impairment charge and a $6 million pretax gain on the early extinguishment of debt.
Excluding those items, adjusted EPS came to $2.06, ahead of the $1.88 FactSet consensus.
Sales climbed to $2.912 billion from $2.889 billion a year ago, also ahead of the FactSet consensus of $2.840 billion.
Chief Executive Gina Boswell said the sales and earnings were above the high end of the company’s expectations and were boosted by a strong holiday performance.
Read also: Victoria’s Secret’s stock having best day in 2 years as sales keep improving
The company is now expecting fiscal 2024 sales to range from down 3% to flat. Adjusted EPS is expected to range from $3.00 to $3.35.
The FactSet consensus implies sales growth of about 8% and EPS is forecast at $3.36.
The 53rd week in 2023 that will not be repeated in 2024 presents a roughly 100 basis point headwind to sales growth, said the company.
For the first quarter, the company is expecting sales to fall 4.5% to 2.0% and for EPS to range from 28 cents to 33 cents, down from 35 cents a year ago. The FactSet consensus implies a sales decline of just 1.1% and EPS is forecast at 39 cents.
The company’s board approved a new shareholder buyback program of up to $500 million.
The stock has gained 18% in the last 12 months, while the S&P 500
SPX,
has gained 27.7%.
