Bath & Body Works Gears Up for Q4 Earnings: Key Factors to Note

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$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].