Bath & Body Works lifts annual profit forecast as digital demand offsets weak store traffic

Bath & Body Works BBWI.N on Wednesday raised its forecast for full-year profit and beat estimates for second-quarter results, benefiting from demand for body care products and home fragrances on digital channels.

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Younger consumers have prioritized small, affordable indulgences, echoing a “lipstick effect” benefit where demand for nice-to-have products cushions broader spending weakness in a strained consumer environment.

• Like many consumer companies, Bath & Body Works is in the midst of a turnaround focused on product innovation and enhancing its digital platform under CEO Daniel Heaf.
• Bath & Body Works posted second-quarter sales of US$1.51 billion, edging past analysts’ estimate of US$1.50 billion, according to data compiled by LSEG.
• “The progress (in its turnaround efforts), because it’s early, has yet to offset the changes in the whole business,” CEO Heaf told Reuters, adding that the company is seeing a decline in store traffic and a broader weakness in mall traffic.
• Bath & Body Works has been expanding its distribution beyond its own stores through third-party channels, including Amazon and a partnership with Ulta Beauty to draw affluent younger consumers.
• Cosmetics maker Coty COTY.N last week forecast current-quarter earnings below expectations, as consumers become more selective in their spending and higher oil prices also weigh.
• Bath & Body Works expects annual adjusted profit between US$2.60 and US$2.80 per share, compared with its prior forecast of US$2.40 to US$2.65 per share.
• It benefited from about US$80 million in tariff refunds during the second quarter.
• Excluding that benefit, the company’s earnings per share stood at 31 cents. Analysts estimated a profit of 24 cents per share.
• It forecast a drop in third-quarter net sales of between 2.5 per cent and 5 per cent, compared to estimates of a 2.9 per cent drop.
• It sees Q3 adjusted EPS between 7 cents and 12 cents, while analysts expect 26 cents.

(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Shailesh Kuber)