Bath & Body Works(US:BBWI) Benzinga·2025-11-20 15:51Core Viewpoint - Bath & Body Works, Inc. reported disappointing third-quarter results, missing earnings expectations and lowering its full-year outlook, indicating a decline in discretionary consumer spending as the holiday season approaches [1][5]. Financial Performance - The company reported third-quarter adjusted earnings per share of 35 cents, below the expected 40 cents [1]. - Quarterly sales were $1.594 billion, a 1% decrease year over year, missing the analyst consensus estimate of $1.634 billion [2]. - Gross profit for the quarter was $658 million, down from $700 million a year ago, with a gross profit margin of 41.3%, a decline of 220 basis points year over year [3]. Margin and Operating Income - Merchandise margin dropped by approximately 260 basis points, impacted by a ~$35 million tariff hit, which accounted for about 200 basis points [4]. - Operating income was $161 million, down from $218 million a year ago, with an operating margin of 10.1%, a decrease of 340 basis points [4]. Fourth Quarter and Fiscal 2025 Outlook - The company anticipates fourth-quarter sales to decline in the high-single-digit range due to a challenging holiday season and weakening consumer sentiment [6]. - The full-year outlook has been revised to low-single-digit sales declines, with adjusted EPS now expected to be at least $2.87, significantly lower than the previous range of $3.35–$3.60 and the consensus estimate of $3.44 [9]. - The projected gross profit rate for the full year is approximately 43.3%, factoring in a ~100-basis-point tariff drag [9]. Cost Management - SG&A rate is expected to be about 24%, reflecting deleverage from softer sales but supported by tight cost controls [7]. - Adjusted SG&A is projected at about 28.3% due to weaker sales [10].