Key TakeawaysBath & Body Works warned that tariffs on Chinese goods would negatively affect its full-year results.CEO Gina Boswell also noted that the retail industry faced "complex challenges."The company's guidance offset better-than-expected fourth-quarter profit and sales. Bath & Body Works (BBWI) shares tumbled 10% Thursday as the personal care and home fragrance retailer warned that new tariffs and soft consumer spending would hurt future results. The company sees full-year earnings per share (EPS) be ...

Financial Data and Key Metrics Changes - In Q4 2024, the company reported net sales of $2.8 billion, a decrease of 4% compared to the prior year, but exceeded guidance [41][12] - Earnings per diluted share were $2.09, surpassing the guidance range of $1.94 to $2.07 [40] - The gross profit rate for Q4 was 46.7%, an increase of 80 basis points year-over-year [43] - Operating income for Q4 was $678 million, representing 24.3% of net sales [45] Business Line Data and Key Metrics Changes - Body care grew low-single digits year-over-year, driven by successful seasonal fragrance launches [17] - Home fragrance performance was slightly down year-over-year, but improved in the second half of 2024 [21][22] - Soaps and sanitizers grew mid-single digits, driven by demand during the quad-demic [23] - Adjacent categories, including men's, hair, lip, and laundry, represented approximately 10% of total business, with significant growth potential [30] Market Data and Key Metrics Changes - International net sales were $84 million, down 10% from the prior year, but expected to return to growth in 2025 [33][49] - System-wide retail sales were up nearly 10% in Q4 on a calendar-adjusted basis, with 20% growth in unaffected areas [33] Company Strategy and Development Direction - The company focuses on three priority areas: accelerating top-line growth, enhancing operational excellence, and deploying strong cash flow for growth and shareholder returns [15][48] - The strategy includes product innovation, marketing, and technology, along with expanding into adjacent categories and international markets [34][29] - The company plans to increase its off-mall store locations to 75% over time, reflecting consumer preferences [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the innovation pipeline and the ability to sustain growth momentum into 2025 [69][68] - The company anticipates net sales growth of 1% to 3% for 2025, with diluted earnings per share expected between $3.25 and $3.60 [38][49] - Management acknowledged the competitive environment and value-seeking customer behavior but remains optimistic about future performance [12][10] Other Important Information - The company achieved approximately $155 million in incremental cost savings through its Fuel for Growth program in 2024, totaling over $300 million in two years [35][36] - The loyalty program grew by 6% year-over-year, with approximately 39 million active members [28][129] - The company plans to invest between $250 million and $270 million in capital expenditures in 2025, focusing on real estate and technology [60] Q&A Session Summary Question: What are the key areas of excitement for 2025? - Management highlighted the innovation pipeline and the positive customer response to collaborations, particularly with Disney [66][69] Question: Can you elaborate on the drivers of revenue growth and traffic acceleration? - Management noted that compelling product offerings and effective marketing strategies have driven traffic and revenue growth [74][78] Question: What assumptions underlie the full-year sales guidance? - Management indicated that the guidance assumes consistent trends with Q4 performance and does not factor in significant macroeconomic improvements [86][87] Question: How do you view the impact of international sales on margins? - Management expects international sales to return to growth, with Q1 having a significant impact on both top line and margin due to timing [110] Question: What is the expected growth for adjacent categories in 2025? - Management anticipates that adjacent categories will become a larger percentage of total sales, with a focus on men's products [117] Question: How does the company plan to manage cost savings going forward? - Management plans to continue seeking efficiencies and cost savings while maintaining customer experience [133]

Core Insights - Bath & Body Works (BBWI) reported revenue of $2.79 billion for the quarter ended January 2025, a year-over-year decline of 4.3% [1] - The company's EPS for the same period was $2.09, slightly up from $2.06 a year ago, with an EPS surprise of +2.45% compared to the consensus estimate of $2.04 [1] Financial Performance - The reported revenue exceeded the Zacks Consensus Estimate of $2.77 billion, resulting in a surprise of +0.57% [1] - Year-over-year changes in key metrics provide better insights into the company's underlying performance, which is crucial for projecting stock price performance [2] Stock Performance - Bath & Body Works shares have returned +9.3% over the past month, outperforming the Zacks S&P 500 composite, which declined by -2.2% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for near-term outperformance against the broader market [3] Store Metrics - Total company-operated stores reached 1,895, slightly above the five-analyst average estimate of 1,893 [4] - Geographic net sales in the U.S. and Canada were $2.11 billion, exceeding the average estimate of $2.07 billion, but reflecting a -2.5% change year-over-year [4] - International geographic net sales were reported at $84 million, below the average estimate of $87.21 million, marking a -10.6% change year-over-year [4]

Core Insights - Bath & Body Works (BBWI) reported quarterly earnings of $2.09 per share, exceeding the Zacks Consensus Estimate of $2.04 per share, and showing a slight decrease from $2.06 per share a year ago [1] - The company achieved revenues of $2.79 billion for the quarter ended January 2025, surpassing the Zacks Consensus Estimate by 0.57%, but down from $2.91 billion year-over-year [3] - The stock has gained approximately 6% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [4] Earnings Performance - The earnings surprise for the recent quarter was 2.45%, following a previous surprise of 6.52% when earnings were $0.49 per share against an expectation of $0.46 [2] - Over the last four quarters, Bath & Body Works has consistently surpassed consensus EPS estimates [2] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.44 on revenues of $1.42 billion, and for the current fiscal year, it is $3.66 on revenues of $7.5 billion [8] - The estimate revisions trend for Bath & Body Works is favorable, leading to a Zacks Rank 2 (Buy), indicating expected outperformance in the near future [7] Industry Context - Bath & Body Works operates within the Zacks Retail - Miscellaneous industry, which is currently ranked in the top 12% of over 250 Zacks industries [9] - The performance of Bath & Body Works may be influenced by the overall industry outlook, as top-ranked industries tend to outperform lower-ranked ones significantly [9]

Financial Performance - Fourth quarter 2024 net sales were $2,788 million, a decrease of 4.3% from $2,912 million in the fourth quarter of 2023[3] - Fourth quarter 2024 earnings per diluted share were $2.09, down from $2.55 in the same quarter last year[4] - Full-year 2024 net sales decreased 1.6% to $7,307 million compared to $7,429 million in 2023[6] - Full-year 2024 earnings per diluted share were $3.61, compared to $3.84 in 2023[7] - Net income for the full year 2024 was $798 million, down from $878 million in 2023, representing a decrease of 9.1%[25] - The company reported a net cash provided by operating activities of $886 million for 2024, down from $954 million in 2023, a decline of 7.1%[25] Future Projections - The company expects 2025 net sales growth of 1% to 3% compared to $7,307 million in 2024[12] - Full-year 2025 earnings per diluted share is projected to be between $3.25 and $3.60[12] - First quarter 2025 net sales are expected to grow between 1% to 3% compared to $1,384 million in the first quarter of 2024[13] - The company anticipates generating free cash flow of $750 to $850 million in fiscal 2025[12] - Forecasted free cash flow for 2025 is estimated to be between $750 million and $850 million[29] Share Repurchase and Equity - The company repurchased 10.4 million shares for $400 million in fiscal 2024[7] - A new $500 million share repurchase program has been authorized by the Board of Directors[8] - The company repurchased $401 million of common stock in 2024, compared to $148 million in 2023, an increase of 170.3%[25] - Total equity (deficit) improved from $(1,626) million in 2024 to $(1,383) million in 2025, a positive change of approximately 15%[23] Operational Metrics - Total assets decreased from $5,463 million in 2024 to $4,872 million in 2025, a decline of approximately 10.8%[23] - The total number of company-operated stores increased from 1,850 in 2024 to 1,895 in 2025, reflecting a net increase of 45 stores[39] - The debt leverage ratio improved from 2.8 in 2023 to 2.5 in 2024, indicating a stronger capital structure[27] - Direct sales in the U.S. and Canada decreased by 9.4% in the fourth quarter of 2024, totaling $595 million compared to $656 million in the same quarter of 2023[37]

Core Insights - Bath & Body Works, Inc. reported strong performance in the fourth quarter of fiscal 2024, exceeding expectations on both revenue and earnings, driven by product innovation and enhanced customer experience [2][11] - The company experienced a decrease in net sales and earnings per diluted share compared to the previous year, attributed to a shift in the fiscal calendar [3][4][6] Fourth Quarter 2024 Results - Net sales for the fourth quarter were $2,788 million, a decrease of 4.3% from $2,912 million in the previous year [3][44] - Earnings per diluted share were $2.09, down from $2.55 in the prior year [4][32] - Operating income was reported at $678 million, compared to $696 million last year [4][22] - Net income decreased to $453 million from $579 million in the previous year [4][22] Full-Year 2024 Results - Full-year net sales decreased by 1.6% to $7,307 million from $7,429 million [6][44] - Earnings per diluted share for the year were $3.61, down from $3.84 in 2023 [7][32] - Full-year operating income was $1,266 million, compared to $1,285 million last year [7][22] - The company repurchased 10.4 million shares for $400 million and reduced long-term debt by $514 million [7] Guidance for 2025 - The company forecasts net sales growth of 1% to 3% for fiscal 2025, with expected earnings per diluted share between $3.25 and $3.60 [13][14] - Anticipated free cash flow for fiscal 2025 is projected to be between $750 million and $850 million [13][34] Share Repurchase Program - The Board of Directors authorized a new share repurchase program of up to $500 million, replacing the previous program [11][15] Store Performance - The total number of company-operated stores increased to 1,895, with 106 new openings and 61 closures [46] - International partner-operated stores also saw an increase, totaling 529 [47]

Core Viewpoint - Bath & Body Works, Inc. reported strong performance in the fourth quarter of fiscal 2024, exceeding expectations on both revenue and earnings, driven by product innovation and enhanced customer experience [2][11]. Fourth Quarter 2024 Results - The company reported net sales of $2,788 million for the fourth quarter, a decrease of 4.3% compared to $2,912 million in the previous year, primarily due to a shift in the fiscal calendar [3][38]. - Earnings per diluted share for the fourth quarter were $2.09, down from $2.55 in the previous year [4][27]. - Operating income for the fourth quarter was $678 million, compared to $696 million last year, while net income decreased to $453 million from $579 million [4][21]. Full-Year 2024 Results - For the full fiscal year 2024, net sales decreased by 1.6% to $7,307 million from $7,429 million in fiscal 2023 [6][38]. - Full-year earnings per diluted share were $3.61, down from $3.84 in the previous year [7][27]. - The company repurchased 10.4 million shares for $400 million and reduced long-term debt by $514 million [7]. Adjusted Financial Information - Adjusted earnings per diluted share for fiscal 2024 were $3.29, compared to $3.27 in the previous year [10][27]. - Adjusted net income for the full year was $729 million, down from $747 million in fiscal 2023 [10][26]. 2025 Guidance - The company forecasts net sales growth of 1% to 3% for fiscal 2025, with expected earnings per diluted share between $3.25 and $3.60 [13][14]. - Anticipated free cash flow for fiscal 2025 is projected to be between $750 million and $850 million [13][28]. Share Repurchase Program - The Board of Directors authorized a new share repurchase program of up to $500 million, replacing the previous authority of approximately $120 million [15]. Store Performance - As of February 1, 2025, the total number of company-operated stores increased to 1,895, with 1,782 in the U.S. and 113 in Canada [40]. - Internationally, the total number of partner-operated stores rose to 529 [41].

Financial Results - Bath & Body Works, Inc. is set to release its fourth-quarter financial results on February 27, with expected earnings of $2.04 per share, a decrease from $2.06 per share in the same period last year [1] - The company projects quarterly revenue of $2.78 billion, down from $2.91 billion a year earlier [1] Dividend Announcement - On February 7, Bath & Body Works declared a regular quarterly dividend of 20 cents per share, payable on March 7 to shareholders of record as of February 21 [2] - The company's shares increased by 1.1%, closing at $41.08 on Wednesday [2] Analyst Ratings - Raymond James analyst Olivia Tong maintained an Outperform rating and raised the price target from $42 to $46 [4] - Barclays analyst Adrienne Yih upgraded the stock from Underweight to Equal-Weight, increasing the price target from $34 to $43 [4] - JP Morgan analyst Matthew Boss upgraded the stock from Neutral to Overweight, raising the price target from $41 to $47 [4] - Wells Fargo analyst Ike Boruchow upgraded the stock from Equal-Weight to Overweight, increasing the price target from $42 to $48 [4] - TD Cowen analyst Jonna Kim maintained a Buy rating and raised the price target from $42 to $48 [4]

Core Viewpoint - Bath & Body Works, Inc. (BBWI) is expected to report a decline in both revenue and earnings for the fourth quarter of fiscal 2024, primarily due to a challenging fiscal comparison and increased expenses [1][3][4]. Financial Performance Expectations - The Zacks Consensus Estimate for BBWI's revenues is $2.77 billion, reflecting a 4.8% decrease from the previous year [1]. - The consensus estimate for earnings per share (EPS) is $2.04, down from $2.06 reported in the same period last year [1]. - Earnings per share are projected to be between $1.94 and $2.07, indicating potential challenges in meeting prior year figures [3]. Factors Impacting Performance - The company is facing a difficult fiscal comparison due to the loss of the 53rd week and five fewer shopping days between Thanksgiving and Christmas compared to the prior year, which is expected to negatively impact net sales [3]. - Rising selling, general and administrative (SG&A) expenses are a concern, with a 4.6% increase in the third quarter to $482 million and a projected 40 basis point rise in SG&A as a percentage of net sales for the fourth quarter [4]. Growth Areas - Despite the challenges, BBWI has seen growth in its core product categories, including Body Care, Home Fragrance, and Soaps & Sanitizers, each showing low-single-digit year-over-year growth in the third quarter [5]. - New seasonal fragrances and giftable items are anticipated to have further boosted sales, particularly among younger consumers [5]. Cost Management Initiatives - The company has implemented a "fuel-for-growth" program, expected to generate $150 million in cost savings for fiscal 2024, exceeding initial estimates [6]. - In the third quarter, BBWI achieved $35 million in cost benefits, contributing to a total of $300 million in savings over the past two years [6]. Earnings Prediction Model - The Zacks model indicates a potential earnings beat for BBWI, supported by a positive Earnings ESP of +1.72% and a Zacks Rank of 2 (Buy) [7].

Core Viewpoint - Bath & Body Works (BBWI) is anticipated to report a year-over-year decline in earnings due to lower revenues for the quarter ended January 2025, with the consensus outlook indicating potential impacts on its near-term stock price [1][2]. Earnings Expectations - The upcoming earnings report is scheduled for February 27, 2025, with expectations of quarterly earnings at $2.04 per share, reflecting a -1% change year-over-year, and revenues projected at $2.77 billion, down 4.8% from the previous year [3][2]. Estimate Revisions - The consensus EPS estimate has been revised 0.74% higher in the last 30 days, indicating a collective reassessment by analysts [4]. - The Most Accurate Estimate for Bath & Body Works is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +1.72%, suggesting a bullish outlook on the company's earnings prospects [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [8]. - Bath & Body Works currently holds a Zacks Rank of 2, enhancing the likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Bath & Body Works exceeded the expected earnings of $0.46 per share by delivering $0.49, resulting in a surprise of +6.52% [12]. - The company has successfully beaten consensus EPS estimates in the last four quarters [13]. Conclusion - While an earnings beat may not solely dictate stock movement, the combination of a positive Earnings ESP and a favorable Zacks Rank increases the odds of success for investors [14][15]. - Bath & Body Works is positioned as a compelling earnings-beat candidate, but investors should consider other influencing factors as well [16].