In a recent announcement, Bath & Body Works has revised its full-year sales outlook downwards after reporting fiscal second-quarter revenues that fell short of expectations. The personal care and home fragrance retailer has adjusted its forecast for fiscal year 2024, now anticipating a decrease in net sales by 2% to 4%.
This revision is in contrast to its previous projection, which had indicated a slight drop of 2.5% to a stable performance. Additionally, the report highlighted that the 53rd week in fiscal 2023 is expected to contribute approximately 100 basis points of headwind to the net sales outlook for the upcoming fiscal year. During an earnings conference call, Chief Financial Officer Eva Boratto stated, "Based on our first half of the year sales trend of down 1.5%, as well as the choppier macroeconomic environment, we do not anticipate the sales acceleration as originally planned," as outlined in a Capital IQ transcript. The market reacted sharply, with Bath & Body's shares witnessing a decline of 7.6% during Wednesday afternoon trading, reflecting investor sentiments towards the revised forecasts. The company is now projecting adjusted earnings for the full year in the range of $3.06 to $3.26 per share, which marks a 1% decrease at the midpoint compared to prior guidance.
In a parallel assessment, analysts surveyed by Capital IQ had forecasted an average earnings estimate of $3.24 per share. The current outlook incorporates an anticipated impact from $400 million allocated for share repurchases, an increase from the initial expectation of $300 million. For the fiscal quarter ending August 3, net sales have decreased by 2.1% year-over-year, totaling $1.53 billion, which fell below Wall Street's expectations of $1.54 billion.
Adjusted earnings per share (EPS) also saw a decline, dropping to $0.37 from $0.40, although this still surpassed analysts' expectations of $0.36. Chief Executive Gina Boswell discussed the company's performance in light of the prevailing economic uncertainty, stating, "Our performance came against a challenging backdrop of economic uncertainty and consumers highly focused on finding value." Furthermore, it was noted that the semi-annual sale did not meet the company's expectations, impacting overall sales performance. President Julie Rosen elaborated on the sales breakdown, indicating that home fragrance and body care sales experienced low single-digit declines compared to the previous year, while soaps and sanitizers faced mid-single-digit declines. Looking ahead, the company has set an EPS range of $0.41 to $0.47 for the ongoing quarter, with projected net sales anticipated to be flat to increasing by 2.5%. In terms of operational efficiency, Bath & Body Works has heightened its expectations for annual cost savings to approximately $130 million, a significant rise from the previous estimate of $100 million.
Capital expenditures for the full year are now anticipated to be around $250 million, lowered from an earlier projection of $300 million to $325 million. The reduction is largely attributed to cost-saving measures related to real estate development and the timing surrounding multi-year supply chain investments. As of the latest market analysis, Bath & Body Works shares have been evaluated at a price of $32.13, reflecting a change of -2.59, and a percentage shift of -7.46..