Bath & Body Works, Inc. (NYSE: BBWI) today reported first
quarter 2023 results.
Gina Boswell, CEO of Bath & Body Works, commented, “We
delivered first quarter sales in line with our expectations while
our EPS was better than anticipated as we saw benefits from our
work to improve merchandise margin as well as early benefits from
our cost optimization initiatives. I want to thank our team for
their continued dedication and efforts in delivering innovation and
newness to our customers as well as leveraging the agility of our
vertically integrated supply chain to meet demand and capture
market opportunities. In addition, we maintained our intense focus
on efficiency and navigated the ongoing challenging macroeconomic
environment. Looking forward, we are moving quickly and
implementing our plans to profitably grow sales and drive long-term
value for our shareholders. I remain excited about the
opportunities ahead, and I am confident that the future is bright
for Bath & Body Works.”
First Quarter 2023 Results
The company reported net sales of $1.396 billion for the first
quarter ended April 29, 2023, a decrease of 4% compared to net
sales of $1.450 billion for the first quarter ended April 30,
2022.
The company reported earnings per diluted share of $0.35 for the
first quarter of 2023, compared to $0.64 for the same period of the
prior year. First quarter operating income was $181 million
compared to $280 million last year, and net income was $81 million
compared to $155 million last year.
Reported first quarter 2023 net income includes a $7 million
pre-tax gain ($5 million after-tax gain) associated with the early
extinguishment of debt, resulting from the open market repurchase
and retirement of $84 million principal amount of the company’s
senior notes during the first quarter.
Excluding the gain on the early extinguishment of debt, adjusted
first quarter 2023 earnings per diluted share were $0.33 and
adjusted net income was $76 million.
At the conclusion of this press release is a reconciliation of
reported-to-adjusted results.
2023 Outlook
The company has updated its full-year forecast to reflect
better-than-expected bottom line results and the impact of the gain
on the early extinguishment of debt in the first quarter.
For fiscal 2023, the company reiterates its forecast of flat net
sales to a mid-single digit decline compared to $7.560 billion in
2022. The company now expects full-year 2023 earnings per diluted
share to be between $2.70 and $3.10, compared to $3.40 in 2022. The
company expects full-year 2023 adjusted earnings per diluted share
to be between $2.68 and $3.08. The company’s adjusted earnings per
diluted share forecast excludes the gain on the early
extinguishment of debt associated with the open market repurchase
and retirement of $84 million principal amount of the company’s
senior notes during the first quarter.
Fiscal 2023 will include a 53rd week, with the fourth quarter of
fiscal 2023 consisting of 14 weeks. The company’s full-year outlook
includes the impact of the 53rd week, estimated at 7 cents per
diluted share.
The company expects second quarter net sales to decline low- to
mid-single digits compared to $1.618 billion in the second quarter
of 2022. Second quarter earnings per diluted share are expected to
be between $0.27 and $0.32, compared to $0.52 earnings per diluted
share in the second quarter of 2022.
The company’s second quarter and full-year outlook exclude the
impact of any future debt or share repurchase activity.
Earnings Call and Additional Information
Bath & Body Works, Inc. will conduct its first quarter
earnings call at 9:00 a.m. Eastern on May 18. To listen, call
1.888.946.7609 (international dial-in number: 1.517.308.9411);
conference ID 6362067. For an audio replay, call 1.888.566.0470
(international replay number: 1.203.369.3050); conference ID
6362067 or log onto www.BBWInc.com.
ABOUT BATH & BODY WORKS
Home of America’s Favorite Fragrances®, Bath
& Body Works is a global leader in personal care and home
fragrance, including top-selling collections for fine fragrance
mist, body lotion and body cream, 3-wick candles, home fragrance
diffusers and liquid hand soap. Powered by agility and innovation,
the company’s predominantly U.S.-based supply chain enables the
company to deliver quality, on-trend luxuries at affordable prices.
Bath & Body Works serves and delights customers however and
wherever they want to shop, from welcoming, in-store experiences at
more than 1,800 company-operated Bath & Body Works locations in
the U.S. and Canada and more than 435 international franchised
locations to an online storefront at bathandbodyworks.com.
Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995
We caution that any forward-looking statements
(as such term is defined in the Private Securities Litigation
Reform Act of 1995) contained in this press release or made by our
company or our management involve risks and uncertainties and are
subject to change based on various factors, many of which are
beyond our control. Accordingly, our future performance and
financial results may differ materially from those expressed or
implied in any such forward-looking statements. Words such as
“estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,”
“intend,” “planned,” “potential,” “target,” “goal” and any similar
expressions may identify forward-looking statements. Risks
associated with the following factors, among others, in some cases
have affected and in the future could affect our financial
performance and actual results and could cause actual results to
differ materially from those expressed or implied in any
forward-looking statements included in this press release or
otherwise made by our company or our management:
- general economic conditions, inflation and deflation, consumer
confidence, consumer spending patterns and market disruptions
including pandemics or significant health hazards, severe weather
conditions, natural disasters, terrorist activities, financial
crises, political crises or other major events, or the prospect of
these events;
- the seasonality of our business;
- the anticipated benefits from the Victoria’s Secret & Co.
spin-off may not be realized;
- the spin-off of Victoria’s Secret & Co. may not be tax-free
for U.S. federal income tax purposes;
- our dependence on Victoria’s Secret & Co. for information
technology services and the transition of such services to our own
information technology systems or to those of third-party
technology service providers;
- our ability to attract, develop and retain qualified associates
and manage labor-related costs;
- difficulties arising from turnover in company leadership or
other key positions;
- the dependence on store traffic and the availability of
suitable store locations on appropriate terms;
- our continued growth in part through new store openings and
existing store remodels and expansions;
- our ability to successfully operate and expand internationally
and related risks;
- our independent franchise, license and wholesale partners;
- our direct channel business;
- our ability to protect our reputation and our brand image;
- our ability to successfully complete environmental, social and
governance initiatives, and associated costs thereof;
- our ability to successfully achieve expected annual cost
savings in connection with our profit optimization efforts to
reduce expenses and improve operating efficiency in the
business;
- our ability to attract customers with marketing, advertising
and promotional programs;
- our ability to maintain, enforce and protect our trade names,
trademarks and patents;
- the highly competitive nature of the retail industry and the
segments in which we operate;
- consumer acceptance of our products and our ability to manage
the life cycle of our brand, develop new merchandise and launch new
product lines successfully;
- our ability to source, distribute and sell goods and materials
on a global basis, including risks related to:
- political instability, wars and other armed conflicts,
environmental hazards or natural disasters;
- significant health hazards or pandemics, such as the COVID-19
pandemic, which could result in closed factories and/or stores,
reduced workforces, scarcity of raw materials, and scrutiny or
embargoing of goods produced in impacted areas;
- duties, taxes and other charges;
- legal and regulatory matters;
- volatility in currency exchange rates;
- local business practices and political issues;
- delays or disruptions in shipping and transportation and
related pricing impacts;
- disruption due to labor disputes; and
- changing expectations regarding product safety due to new
legislation;
- our geographic concentration of vendor and distribution
facilities in central Ohio;
- our reliance on a limited number of suppliers to support a
substantial portion of our inventory purchasing needs;
- the ability of our vendors to deliver products in a timely
manner, meet quality standards and comply with applicable laws and
regulations;
- fluctuations in foreign currency exchange rates;
- fluctuations in product input costs;
- fluctuations in energy costs;
- our ability to adequately protect our assets from loss and
theft;
- increases in the costs of mailing, paper, printing or other
order fulfillment logistics;
- claims arising from our self-insurance;
- our and our third-party service providers’, including
Victoria’s Secret & Co. during the term of the Transition
Services Agreement between us and Victoria’s Secret & Co.,
ability to implement and maintain information technology systems
and to protect associated data;
- our ability to maintain the security of customer, associate,
third-party and company information;
- stock price volatility;
- our ability to pay dividends and make share repurchases under
share repurchase authorizations;
- shareholder activism matters;
- our ability to maintain our credit ratings;
- our ability to service, repurchase or refinance our debt and
maintain compliance with our restrictive covenants;
- the impact of the transition from London Interbank Offered Rate
and our ability to adequately manage such transition;
- our ability to comply with laws, regulations and technology
platform rules or other obligations related to data privacy and
security;
- our ability to comply with regulatory requirements;
- legal and compliance matters; and
- tax, trade and other regulatory matters.
We are not under any obligation and do not
intend to make publicly available any update or other revisions to
any of the forward-looking statements contained in this press
release to reflect circumstances existing after the date of this
press release or to reflect the occurrence of future events even if
experience or future events make it clear that any expected results
expressed or implied by those forward-looking statements will not
be realized. Additional information regarding these and other
factors can be found in “Item 1A. Risk Factors” in our 2022 Annual
Report on Form 10-K, as filed with the Securities and Exchange
Commission, and our subsequent filings.
For further information, please contact:
Bath & Body Works, Inc.:Investor RelationsHeather
HollanderInvestorRelations@bbw.com
Media RelationsTammy Roberts MyersCommunications@bbw.com
BATH & BODY WORKS, INC. |
First Quarter 2023 |
Total
Sales (In millions): |
|
|
|
|
|
|
|
|
|
First Quarter2023 |
|
|
First Quarter2022 |
|
%Inc/(Dec) |
Stores - U.S. and Canada |
$ |
1,034 |
|
$ |
1,059 |
|
(2 |
%) |
Direct - U.S. and Canada |
|
280 |
|
|
318 |
|
(12 |
%) |
International (a) |
|
82 |
|
|
73 |
|
13 |
% |
Total Bath & Body Works |
$ |
1,396 |
|
$ |
1,450 |
|
(4 |
%) |
(a) Results include royalties associated with franchised stores and
wholesale sales. |
Total
Company-Operated Stores: |
|
Stores |
|
|
|
|
|
Stores |
|
1/28/2023 |
|
Opened |
|
Closed |
|
4/29/2023 |
United States |
1,693 |
|
16 |
|
(8 |
) |
|
1,701 |
Canada |
109 |
|
— |
|
— |
|
|
109 |
Total Bath & Body Works |
1,802 |
|
16 |
|
(8 |
) |
|
1,810 |
Total
Partner-Operated Stores: |
|
Stores |
|
|
|
|
|
Stores |
|
1/28/2023 |
|
Opened |
|
Closed |
|
4/29/2023 |
International |
401 |
|
9 |
|
— |
|
410 |
International - Travel Retail |
26 |
|
— |
|
— |
|
26 |
Total International |
427 |
|
9 |
|
— |
|
436 |
BATH & BODY WORKS, INC. |
CONSOLIDATED STATEMENTS OF INCOME |
THIRTEEN WEEKS ENDED APRIL 29,
2023 AND APRIL 30,
2022 |
(Unaudited) |
(In millions, except per share amounts) |
|
|
2023 |
|
|
|
2022 |
|
Net Sales |
$ |
1,396 |
|
|
$ |
1,450 |
|
Costs of Goods Sold, Buying and Occupancy |
|
(800 |
) |
|
|
(781 |
) |
Gross Profit |
|
596 |
|
|
|
669 |
|
General, Administrative and Store Operating Expenses |
|
(415 |
) |
|
|
(389 |
) |
Operating Income |
|
181 |
|
|
|
280 |
|
Interest Expense |
|
(89 |
) |
|
|
(89 |
) |
Other Income |
|
20 |
|
|
|
1 |
|
Income Before Income Taxes |
|
112 |
|
|
|
192 |
|
Provision for Income Taxes |
|
31 |
|
|
|
37 |
|
Net Income |
$ |
81 |
|
|
$ |
155 |
|
|
|
|
|
Net Income per Diluted Share |
$ |
0.35 |
|
|
$ |
0.64 |
|
|
|
|
|
Weighted Average Diluted Shares Outstanding |
|
230 |
|
|
|
243 |
|
BATH & BODY WORKS, INC. |
CONSOLIDATED CONDENSED BALANCE SHEETS |
(Unaudited) |
(In millions) |
|
April 29, |
|
April 30, |
|
2023 |
|
2022 |
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and Cash Equivalents |
$ |
1,046 |
|
|
$ |
651 |
|
Accounts Receivable, Net |
|
145 |
|
|
|
167 |
|
Inventories |
|
771 |
|
|
|
820 |
|
Other |
|
118 |
|
|
|
114 |
|
Total Current Assets |
|
2,080 |
|
|
|
1,752 |
|
Property and Equipment, Net |
|
1,223 |
|
|
|
1,059 |
|
Operating Lease Assets |
|
1,072 |
|
|
|
1,058 |
|
Goodwill |
|
628 |
|
|
|
628 |
|
Trade Name |
|
165 |
|
|
|
165 |
|
Deferred Income Taxes |
|
37 |
|
|
|
44 |
|
Other Assets |
|
158 |
|
|
|
154 |
|
Total Assets |
$ |
5,363 |
|
|
$ |
4,860 |
|
LIABILITIES AND EQUITY (DEFICIT) |
|
|
|
Current Liabilities: |
|
|
|
Accounts Payable |
$ |
426 |
|
|
$ |
470 |
|
Accrued Expenses and Other |
|
585 |
|
|
|
534 |
|
Current Operating Lease Liabilities |
|
165 |
|
|
|
163 |
|
Income Taxes |
|
101 |
|
|
|
73 |
|
Total Current Liabilities |
|
1,277 |
|
|
|
1,240 |
|
Deferred Income Taxes |
|
168 |
|
|
|
157 |
|
Long-term Debt |
|
4,781 |
|
|
|
4,856 |
|
Long-term Operating Lease Liabilities |
|
1,032 |
|
|
|
1,019 |
|
Other Long-term Liabilities |
|
275 |
|
|
|
246 |
|
Total Equity (Deficit) |
|
(2,170 |
) |
|
|
(2,658 |
) |
Total Liabilities and Equity (Deficit) |
$ |
5,363 |
|
|
$ |
4,860 |
|
BATH & BODY WORKS, INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
(In millions) |
|
First Quarter |
|
|
2023 |
|
|
|
2022 |
|
Operating Activities: |
|
|
|
Net Income |
$ |
81 |
|
|
$ |
155 |
|
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities: |
|
|
|
Depreciation of Long-lived Assets |
|
63 |
|
|
|
53 |
|
Share-based Compensation Expense |
|
7 |
|
|
|
12 |
|
Gain on Extinguishment of Debt |
|
(7 |
) |
|
|
— |
|
Changes in Assets and Liabilities: |
|
|
|
Accounts Receivable |
|
81 |
|
|
|
72 |
|
Inventories |
|
(63 |
) |
|
|
(111 |
) |
Accounts Payable, Accrued Expenses and Other |
|
(113 |
) |
|
|
(97 |
) |
Income Taxes Payable |
|
23 |
|
|
|
35 |
|
Other Assets and Liabilities |
|
(28 |
) |
|
|
(53 |
) |
Net Cash Provided by Operating Activities |
$ |
44 |
|
|
$ |
66 |
|
|
|
|
|
Investing Activities: |
|
|
|
Capital Expenditures |
$ |
(93 |
) |
|
$ |
(88 |
) |
Other Investing Activities |
|
(1 |
) |
|
|
— |
|
Net Cash Used for Investing Activities |
$ |
(94 |
) |
|
$ |
(88 |
) |
|
|
|
|
Financing Activities: |
|
|
|
Payments for Long-term Debt |
$ |
(74 |
) |
|
$ |
— |
|
Repurchases of Common Stock |
|
— |
|
|
|
(1,227 |
) |
Dividends Paid |
|
(46 |
) |
|
|
(48 |
) |
Tax Payments related to Share-based Awards |
|
(8 |
) |
|
|
(26 |
) |
Other Financing Activities |
|
(7 |
) |
|
|
(5 |
) |
Net Cash Used for Financing Activities |
$ |
(135 |
) |
|
$ |
(1,306 |
) |
|
|
|
|
Effects of Exchange Rate Changes on Cash and Cash Equivalents |
$ |
(1 |
) |
|
$ |
— |
|
Net Decrease in Cash and Cash Equivalents |
|
(186 |
) |
|
|
(1,328 |
) |
Cash and Cash Equivalents, Beginning of Year |
|
1,232 |
|
|
|
1,979 |
|
Cash and Cash Equivalents, End of Period |
$ |
1,046 |
|
|
$ |
651 |
|
BATH & BODY WORKS, INC. |
ADJUSTED FINANCIAL INFORMATION |
(Unaudited) |
(In millions, except per share amounts) |
|
|
|
|
|
First Quarter |
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Reported Net Income to Adjusted Net
Income |
Reported Net Income |
$ |
81 |
|
|
$ |
155 |
|
Gain on Extinguishment of Debt |
|
(7 |
) |
|
|
— |
|
Tax Effect of Gain on Extinguishment of Debt |
|
2 |
|
|
|
— |
|
Adjusted Net Income |
$ |
76 |
|
|
$ |
155 |
|
|
|
|
|
Reconciliation of Reported Earnings Per Diluted Share to
Adjusted Earnings Per Diluted Share |
Reported Earnings Per Diluted Share |
$ |
0.35 |
|
|
$ |
0.64 |
|
Gain on Extinguishment of Debt |
|
(0.03 |
) |
|
|
— |
|
Tax Effect of Gain on Extinguishment of Debt |
|
0.01 |
|
|
|
— |
|
Adjusted Earnings Per Diluted Share |
$ |
0.33 |
|
|
$ |
0.64 |
|
See Notes to Reconciliation of GAAP Financial
Measures to Non-GAAP Financial Measures.
BATH & BODY WORKS, INC. |
ADJUSTED FORECASTED FINANCIAL INFORMATION |
(Unaudited) |
|
|
|
|
|
Full-Year |
|
|
2023 |
|
Reconciliation of Forecasted Earnings Per Diluted Share to
Adjusted Forecasted Earnings Per Diluted Share |
Forecasted Earnings Per Diluted Share |
$ |
2.70 |
|
— |
$ |
3.10 |
|
Gain on Extinguishment of Debt |
|
|
|
(0.03) |
|
|
|
Tax Effect of Gain on Extinguishment of Debt |
|
|
|
0.01 |
|
|
|
Adjusted Forecasted Earnings Per Diluted Share |
$ |
2.68 |
|
— |
$ |
3.08 |
|
|
|
The company's forecast excludes the impact of any
future debt or share repurchase activity.
See Notes to Reconciliation of GAAP Financial
Measures to Non-GAAP Financial Measures.
BATH & BODY WORKS,
INC.NOTES TO RECONCILIATION OF GAAP FINANCIAL
MEASURES TO NON-GAAP FINANCIAL
MEASURES(Unaudited)
The “Adjusted Financial Information” provided in
the attached reflects the following non-GAAP financial
measures:
Fiscal 2023
In the first quarter of 2023, adjusted results
exclude the following:
- A
$7 million pre-tax gain ($5 million net of tax of $2 million),
included in other income, associated with the early extinguishment
of outstanding notes.
Fiscal 2022
In the first quarter of 2022, there were no
adjustments to results.
The “Adjusted Forecasted Financial Information”
provided in the attached reflects the following non-GAAP financial
measures:
Fiscal 2023
Forecasted full-year 2023 adjusted results exclude
the following:
- A
$7 million pre-tax gain ($5 million net of tax of $2 million),
included in other income for the first quarter of 2023, associated
with the early extinguishment of outstanding notes.
- The
company's forecast of adjusted earnings per diluted share excludes
the impact of any future debt or share repurchase activity.
The Adjusted Financial Information and Adjusted
Forecasted Financial Information should not be construed as an
alternative to the results determined in accordance with generally
accepted accounting principles. Further, the company’s definitions
of adjusted income information may differ from similarly titled
measures used by other companies. Management believes that the
presentation of adjusted financial information provides additional
information to investors to facilitate the comparison of past and
present operations. While it is not possible to predict future
results, management believes the adjusted financial information is
useful for the assessment of the ongoing operations of the company
because the adjusted items are not indicative of the company’s
ongoing operations due to their size and nature. Additionally,
management uses adjusted financial information as key performance
measures of results of operations for the purpose of evaluating
performance internally. The Adjusted Financial Information and
Adjusted Forecasted Financial Information should be read in
conjunction with the company’s historical financial statements and
notes thereto contained in the company’s Quarterly Reports on Form
10-Q and Annual Report on Form 10-K.
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