On June 4, 2024, Bath & Body Works Inc (BBWI, Financial) released its 8-K filing reporting its first quarter 2024 results. The specialty home fragrance and body care retailer, operating under the Bath & Body Works, C.O. Bigelow, and White Barn brands, delivered a strong start to the year with net sales and earnings per share (EPS) exceeding guidance.
Company Overview
Bath & Body Works Inc (BBWI, Financial) is a leading retailer in the home fragrance and body care market, primarily operating in North America. The company generates 74% of its sales from its brick-and-mortar network, which includes over 1,800 retail stores. The remaining sales come from digital and international channels. The company aims to drive future growth through store reformatting, digital expansion, and adjacent category growth.
First Quarter 2024 Performance
For the quarter ended May 4, 2024, Bath & Body Works Inc (BBWI, Financial) reported net sales of $1,384 million, a slight decrease of 0.9% compared to $1,396 million in the same period last year. Despite this, the company exceeded its guidance range, benefiting from a 200 basis point shift in the fiscal calendar, although this was partially offset by weaker performance in certain international markets.
The company reported earnings per diluted share of $0.38, surpassing the analyst estimate of $0.31 and showing an increase from $0.35 in the prior year. Operating income for the quarter was $187 million, up from $181 million last year, while net income rose to $87 million from $81 million.
Financial Achievements and Challenges
Bath & Body Works Inc (BBWI, Financial) achieved significant financial milestones, including a 15% increase in adjusted EPS to $0.38 from $0.33 last year. This performance underscores the company's ability to drive profitability despite a challenging retail environment. The company's focus on product innovation and brand engagement has resulted in greater customer retention and loyalty.
However, the company faces challenges, particularly in international markets, which saw a 29.3% decline in sales. This highlights the need for strategic adjustments to bolster international performance.
Key Financial Metrics
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Net Sales | $1,384 million | $1,396 million |
| Gross Profit | $606 million | $596 million |
| Operating Income | $187 million | $181 million |
| Net Income | $87 million | $81 million |
| EPS (Diluted) | $0.38 | $0.35 |
Income Statement Highlights
The company's gross profit increased to $606 million from $596 million, reflecting improved cost management. General, administrative, and store operating expenses rose slightly to $419 million from $415 million. Interest expense decreased to $82 million from $89 million, contributing to the overall improvement in net income.
Balance Sheet and Cash Flow
As of May 4, 2024, Bath & Body Works Inc (BBWI, Financial) reported total assets of $5,221 million, down from $5,363 million in the previous year. Cash and cash equivalents stood at $855 million, a decrease from $1,046 million. The company also reported a reduction in long-term debt to $4,282 million from $4,781 million.
Net cash provided by operating activities increased to $76 million from $44 million, while net cash used for investing activities decreased to $46 million from $94 million. Net cash used for financing activities rose to $259 million from $135 million, primarily due to increased share repurchases and debt payments.
CEO Commentary
"We delivered a better-than-expected start to the year with net sales and earnings per share above the high-end of our guidance range. We are particularly excited with the success of our product introductions and newness, which drove the performance of both our core business and new adjacencies. Our focus on building strong brand awareness and engagement is delivering greater customer retention and loyalty. With our strong start to the year, we are pleased to narrow our full-year guidance range while raising the midpoint for both the top- and bottom-lines. I am proud of the way our team is executing on our strategic initiatives, and looking ahead, we remain confident in our ability to deliver long-term profitable growth." - Gina Boswell, CEO of Bath & Body Works
Guidance for Fiscal 2024
For fiscal 2024, Bath & Body Works Inc (BBWI, Financial) has narrowed its guidance, raising the midpoint for both net sales and EPS. The company now expects net sales to range between a decline of 2.5% to flat, relative to $7,429 million in fiscal 2023. Full-year EPS is projected to be between $3.05 and $3.35, compared to $3.84 in fiscal 2023.
For the second quarter of 2024, the company anticipates net sales to range between a decline of 2% to flat, compared to $1,559 million in Q2 2023. EPS for the second quarter is expected to be between $0.31 and $0.36, compared to $0.43 in the same period last year.
For more detailed information, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Bath & Body Works Inc for further details.
