Signs for sale at the Bath and Body Works store in Edmonton. On Thursday, January 6, 2022, in Edmonton, Alberta, Canada.
Arthur Vidak Nurfota | Getty Images
Shares of Bath & Body Works fell in trading on Wednesday after the retailer cut its earnings forecast for the year, in part due to expected inflationary pressures.
Shares fell more than 5% after falling 8.6% during the trading day amid wider market sell-offs.
The company said in prepared notes that it faces higher costs for raw materials, transportation and wages – as do many retailers. Now Bath & Body Works expects to get $ 225 million to $ 250 million from inflation this fiscal year, or about $ 75 million more than originally planned.
The comments come after major retailers Target and Walmart reported this week that such costs ate up their earnings in the first quarter, thus breaking their benchmarks for the coming months.
Bath & Body Works, which sells lotions, candles and other bath soaps, predicts that earnings in 2022 from long-term dilution operations will range from $ 3.80 to $ 4.15 compared to the previous range of $ 4.30 to $ 4.70.
Its earnings per share in the second quarter are expected to be between 60 and 65 cents compared to 77 cents a year earlier.
For the three-month period ended April 30, Bath & Body Works reported net income of $ 154.9 million, or 64 cents per share, compared to earnings of $ 276.6 million, or 97 cents per share, a year earlier. .
This exceeded analysts’ estimates by 53 cents a share, according to a Refinitiv poll.
Sales fell slightly to $ 1.45 billion from $ 1.47 billion a year earlier. But revenue exceeded expectations of $ 1.43 billion.
Bath & Body Works said it will invest this year in updating its loyalty program and in testing a new product line, including hair care. While these investments can help increase customer demand, they can also put pressure on profits in the short term.
This year, shares of Bath & Body Works fell by about 39%.
Find the full press release about revenue here.