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Bath & Body Works (BBWI) Q3 Earnings Beat Estimates, Up Y/Y
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Bath & Body Works, Inc. (BBWI - Free Report) posted third-quarter fiscal 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The top line declined year over year, while the bottom line recorded an increase.
We note that the Zacks Rank #3 (Hold) stock has lost 16.5% in the past three months compared with the industry’s decline of 9.2%.
Q3 in Detail
Adjusted earnings of 48 cents per share in the fiscal third quarter outpaced the Zacks Consensus Estimate of 36 cents. The figure improved 20% from 40 cents in the year-ago quarter. The increase was supported by solid merchandise margin improvement and the benefits of cost optimization efforts.
Revenues fell 2.6% year over year to $1,562 million but beat the Zacks Consensus Estimate of $1,554 million. The year-over-year decline was attributable to a decrease in both average dollar sales and transactions.
Revenues for Stores - U.S. and Canada fell 1% year over year to $1,168 million, faring better than the Zacks consensus Estimate of $1,147 million. Direct - U.S. and Canada revenues dropped 8% to $317 million, falling short of the Zacks Consensus estimate of $328 million. Also, International operations’ revenue declined 5% to $77 million compared with the consensus estimate of $82 million.
Bath & Body Works, Inc. Price, Consensus and EPS Surprise
The gross profit increased 0.6% year over year to $682 million. Meanwhile, the gross margin expanded 140 basis points to 43.7% in the quarter under review. General, administrative and store operating expenses fell 3.2% to $461 million.
Bath & Body Works has reported operating profit of $221 million in third-quarter fiscal 2023, up 9.4% from the year-ago quarter. BBWI’s operating profit margin expanded 150 basis points to 14.1% in the quarter.
Store Update
The company ended the quarter with 1,843 stores, wherein it operated 1,732 stores in the United States and 111 stores in Canada. During the quarter, it opened 72 stores in total and closed 31 stores.
Other Financial Aspects
Bath & Body Works ended the quarter with cash and cash equivalents of $412 million, long-term debt of $4,497 million and long-term operating lease liabilities of $1,020 million. In the first nine months of fiscal 2023, the company provided $28 million in cash for operating activities. It repurchased shares worth $99 million and paid out dividends of $137 million in the first nine months of fiscal 2023.
Outlook
For fiscal 2023, the company anticipates net sales to decline in the range of 2.5-4% compared with $7.560 billion reported in fiscal 2022. For the fiscal year, adjusted earnings are envisioned in the range of $2.90-$3.10 per share. BBWI’s guidance includes the impact of the 53rd week in fiscal 2023, projected at about $85 million of net sales and 5 cents of earnings per share. It anticipates free cash flow in the range of $675 to $725 million for the fiscal year.
For fourth-quarter fiscal 2023, it projects net sales to decline by 1-5% compared with $2.889 billion reported in the fiscal year-ago quarter. Earnings per share are estimated in the band of $1.70-$1.90 compared with $1.86 in the year-ago quarter.
For the quarter, the gross profit rate is projected to be about 44%, as it expects about 100 basis points of year-over-year merchandise margin rate improvement. It expects the SG&A expenses rate to be 22%, while the effective tax rate is predicted to be roughly 26%.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 37.1% and 2.4%, respectively, from the previous year’s reported figures. AEO has a trailing four-quarter average earnings surprise of 43.2%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently carries a Zacks Rank #2 (Buy). ANF delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales implies growth of 10.3% from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 724.8%.
MarineMax, a recreational boat and yacht retailer and a superyacht services company carries a Zacks Rank #2. MarineMax has a trailing four-quarter negative earnings surprise of 10.1% on average.
The Zacks Consensus Estimate for HZO’s current financial year sales suggests growth of 3.1% from the year-ago period’s figures.
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Bath & Body Works (BBWI) Q3 Earnings Beat Estimates, Up Y/Y
Bath & Body Works, Inc. (BBWI - Free Report) posted third-quarter fiscal 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The top line declined year over year, while the bottom line recorded an increase.
We note that the Zacks Rank #3 (Hold) stock has lost 16.5% in the past three months compared with the industry’s decline of 9.2%.
Q3 in Detail
Adjusted earnings of 48 cents per share in the fiscal third quarter outpaced the Zacks Consensus Estimate of 36 cents. The figure improved 20% from 40 cents in the year-ago quarter. The increase was supported by solid merchandise margin improvement and the benefits of cost optimization efforts.
Revenues fell 2.6% year over year to $1,562 million but beat the Zacks Consensus Estimate of $1,554 million. The year-over-year decline was attributable to a decrease in both average dollar sales and transactions.
Revenues for Stores - U.S. and Canada fell 1% year over year to $1,168 million, faring better than the Zacks consensus Estimate of $1,147 million. Direct - U.S. and Canada revenues dropped 8% to $317 million, falling short of the Zacks Consensus estimate of $328 million. Also, International operations’ revenue declined 5% to $77 million compared with the consensus estimate of $82 million.
Bath & Body Works, Inc. Price, Consensus and EPS Surprise
Bath & Body Works, Inc. price-consensus-eps-surprise-chart | Bath & Body Works, Inc. Quote
Margin Details
The gross profit increased 0.6% year over year to $682 million. Meanwhile, the gross margin expanded 140 basis points to 43.7% in the quarter under review. General, administrative and store operating expenses fell 3.2% to $461 million.
Bath & Body Works has reported operating profit of $221 million in third-quarter fiscal 2023, up 9.4% from the year-ago quarter. BBWI’s operating profit margin expanded 150 basis points to 14.1% in the quarter.
Store Update
The company ended the quarter with 1,843 stores, wherein it operated 1,732 stores in the United States and 111 stores in Canada. During the quarter, it opened 72 stores in total and closed 31 stores.
Other Financial Aspects
Bath & Body Works ended the quarter with cash and cash equivalents of $412 million, long-term debt of $4,497 million and long-term operating lease liabilities of $1,020 million. In the first nine months of fiscal 2023, the company provided $28 million in cash for operating activities. It repurchased shares worth $99 million and paid out dividends of $137 million in the first nine months of fiscal 2023.
Outlook
For fiscal 2023, the company anticipates net sales to decline in the range of 2.5-4% compared with $7.560 billion reported in fiscal 2022. For the fiscal year, adjusted earnings are envisioned in the range of $2.90-$3.10 per share. BBWI’s guidance includes the impact of the 53rd week in fiscal 2023, projected at about $85 million of net sales and 5 cents of earnings per share. It anticipates free cash flow in the range of $675 to $725 million for the fiscal year.
For fourth-quarter fiscal 2023, it projects net sales to decline by 1-5% compared with $2.889 billion reported in the fiscal year-ago quarter. Earnings per share are estimated in the band of $1.70-$1.90 compared with $1.86 in the year-ago quarter.
For the quarter, the gross profit rate is projected to be about 44%, as it expects about 100 basis points of year-over-year merchandise margin rate improvement. It expects the SG&A expenses rate to be 22%, while the effective tax rate is predicted to be roughly 26%.
Stocks to Consider
A few better-ranked stocks are American Eagle Outfitters Inc. (AEO - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and MarineMax (HZO - Free Report) .
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 37.1% and 2.4%, respectively, from the previous year’s reported figures. AEO has a trailing four-quarter average earnings surprise of 43.2%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently carries a Zacks Rank #2 (Buy). ANF delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales implies growth of 10.3% from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 724.8%.
MarineMax, a recreational boat and yacht retailer and a superyacht services company carries a Zacks Rank #2. MarineMax has a trailing four-quarter negative earnings surprise of 10.1% on average.
The Zacks Consensus Estimate for HZO’s current financial year sales suggests growth of 3.1% from the year-ago period’s figures.