Summary
Bath & Body Works (BBWI) reported fourth-quarter fiscal 2024 results, surpassing the Zacks Consensus Estimate for both top and bottom lines. Revenues improved year over year, while earnings declined. The company’s growth continues to be supported by innovation, marketing, technology investments, category expansion, and international growth.
Bath & Body Works’ Quarterly Performance
BBWI reported adjusted earnings of $2.09 per share in the fiscal fourth quarter, beating the Zacks Consensus Estimate of $2.04. Earnings increased 1.5% from adjusted earnings of $2.06 in the year-ago quarter. Revenues decreased 4.3% year over year to $2,788 million and surpassed the Zacks Consensus Estimate of $2,772 million.
Key Metrics & Insights
- Revenues for Stores – U.S. and Canada declined 2.4% year over year to $2.11 billion, surpassing the Zacks Consensus Estimate of $2.07 billion.
- Direct – U.S. and Canada revenues tumbled 9.4% to $595 million, missing the consensus estimate of $616.3 million.
- International operations’ revenues declined 10.1% to $84 million, which came below the Zacks Consensus Estimate of $87.2 million.
- Buy online pick up in store demand grew 45% year over year in the quarter, accounting for approximately 25% of total digital demand.
Sneak Peek Into BBWI’s Margins
The gross profit decreased 2.7% year over year to $1.30 billion. However, the gross margin expanded 80 basis points to 46.7% in the quarter under review, driven by cost savings, distribution productivity, and the timing of certain costs.
General, administrative, and store operating expenses decreased 2.8% to $623 million. Bath & Body Works reported an operating income of $678 million in fourth-quarter fiscal 2024, down 2.6% from the year-ago quarter. BBWI’s operating margin increased 40 basis points to 24.3% in the quarter.
Adjusted net income was $453 million, down 3.4% from $469 million in the year-ago quarter. The company ended the quarter with 1,895 stores, wherein it operated 1,782 stores in the United States and 113 in Canada.
Store Update
During 12 months of fiscal 2024, BBWI opened 106 stores in total and closed 61.
BBWI’s Financial Health Snapshot
Bath & Body Works ended the quarter with cash and cash equivalents of $674 million, long-term debt of $3.88 billion, and long-term operating lease liabilities of $883 million. In fiscal 2024, the company provided $886 million in net cash for operating activities.
BBWI Stock Past Six-Month Performance
Shares of this Zacks Rank #2 (Buy) company have gained 15.7% in the past six months compared with the industry’s growth of 3.3%.
Fiscal First Quarter Guidance
For the first quarter of fiscal 2025, net sales growth is expected between 1% and 3%, with international retail sales increasing in the high-single digits and reported net sales growing in the double digits due to shipment timing.
BBWI’s Q4 Outlook
The gross margin is projected at 44%, supported by cost discipline, while SG&A is expected to be 27%, including continued marketing investments at 3.5% of sales and increased technology spending. Net non-operating expenses are forecast at $255 million, reflecting lower interest expenses due to debt reduction in 2024.
Full-Year Earnings Guidance
Full-year earnings per share are projected to be $3.25-$3.60 versus the $3.61 reported in fiscal 2024. Adjusted earnings are expected to be $3.29 per share.
BBWI’s Capital Allocation
The company plans to invest $250-$270 million in capital expenditure, primarily in real estate and technology, with some supply-chain projects shifting from 2024 to 2025.
Conclusion
Bath & Body Works reported fourth-quarter fiscal 2024 results that exceeded expectations. The company’s growth continues to be supported by innovation, marketing, technology investments, category expansion, and international growth. Despite facing challenges in the retail sector, BBWI remains optimistic about sustaining momentum in fiscal 2025.