Bath & Body Works Inc.‘s stock (BBWI, -4.85%) experienced a significant decline of 7% in premarket trade on Wednesday. The company, which was spun out of Victoria’s Secret, failed to meet sales estimates for its second quarter. Net income for the quarter came in at $99 million, or 43 cents a share, a decrease from $120 million, or 52 cents a share, in the same period last year.
Sales Fall Short
While adjusted per-share earnings stood at 40 cents, surpassing the 33 cent FactSet consensus, sales dropped to $1.559 billion from $1.618 billion last year. This fell shy of the $1.564 billion FactSet consensus as well.
CEO’s Perspective
According to Chief Executive Gina Boswell, the company’s sales were in line with expectations. She also mentioned that earnings benefited from a cost optimization and merchandise margin improvement program. Clearly, despite these positive elements, the market expected more from Bath & Body Works Inc.
Outlook for the Future
The company now forecasts full-year adjusted earnings per share to range from $2.80 to $3.10 and predicts a decline of 1.5% to 3.5% in sales. The FactSet consensus suggests an EPS of $3.04. Investors should pay close attention to how Bath & Body Works Inc. manages to rebound from this setback.
Conclusion
While the stock has faced a challenging year so far, where it has fallen 17%, it is worth noting that the S&P 500 (SPX, -0.28%) has gained 14% during the same period. Entrepreneurs and investors alike should closely monitor the developments surrounding Bath & Body Works Inc.’s stock in the coming months.
