What Happened?
Shares of personal care and home fragrance retailer Bath & Body Works (NYSE:BBWI) jumped 23% in the pre-market session after the company reported a "beat and raise" quarter. Q3 financial results exceeded analysts' revenue and EPS expectations. Guidance was also strong as it raised its Q4 revenue and EPS outlook. The company cited improved momentum with solid contributions from new and existing customers. This is an encouraging signal heading into the important holiday season. Overall, this was a solid quarter.
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What The Market Is Telling Us
Bath and Body Works’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. But moves this big are rare even for Bath and Body Works and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 11.8% on the news that 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 top line 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.
Bath and Body Works is down 19.7% since the beginning of the year, and at $35.94 per share, it is trading 30.8% below its 52-week high of $51.94 from May 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 $1,875.
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