Bath & Body Works, Inc. (NYSE: BBWI) today reported second
quarter 2022 results.
Sarah Nash, Executive Chair and Interim Chief
Executive Officer, said “Our results in the second quarter were
better than our most recent expectations, reflecting improvement in
sales toward the end of the quarter as customers responded to
newness in our assortment as well as favorability in expenses. The
business continues to perform at levels significantly above
pre-pandemic and our team is effectively navigating the challenging
environment and inflationary pressure affecting our customers and
our business.”
Nash continued, “We are leveraging the dynamic
environment to better position ourselves to capture new
opportunities and drive future growth. While we are taking
aggressive action to control costs and improve overall
efficiencies, we remain focused on customer-facing investments,
including the upcoming launch of our loyalty program throughout the
U.S. Looking to the back half of the year, we believe that our
planned Fall and Holiday assortments are well-positioned to
resonate with our customers and our inventories are clean and
forward facing. Our product development and innovation
capabilities, combined with our predominantly North American,
vertically integrated supply chain, provide us with the agility to
chase into key winners during the season.”
Second Quarter 2022 ResultsThe
company reported net sales of $1.618 billion for the second quarter
ended July 30, 2022, a decrease of 5% compared to net sales of
$1.704 billion for the second quarter ended July 31, 2021, but an
increase of 45% compared to the second quarter of 2019.
The company reported earnings from continuing
operations per diluted share of $0.52 for the second quarter ended
July 30, 2022, compared to $0.77 for the quarter ended July 31,
2021. Second quarter operating income was $241.8 million compared
to $384.2 million last year, and net income from continuing
operations was $120.0 million compared to $215.3 million last
year.
Profit Improvement Initiatives and
Organizational RealignmentThe company is pursuing a number
of initiatives to improve financial performance and better position
the organization for long-term growth. These initiatives include
organizational changes, additional cost control actions and
merchandise margin improvement opportunities.
As part of efforts to better position the
organization for long-term growth and create organizational
efficiencies, the company recently simplified and realigned its
operating structure. These actions included the elimination of
about 130 roles, the majority of which were leadership
positions.
Together these actions are expected to result in
estimated savings of approximately $30 million in the second half
of 2022, prior to any impact from severance. The company expects to
record severance and other charges of approximately $6 million in
the third quarter of 2022 related to the organizational
actions.
2022 OutlookThe company is
committed to managing and forecasting the business prudently. The
company is forecasting third quarter earnings from continuing
operations per diluted share between $0.10 and $0.20. For fiscal
2022, the company is forecasting earnings from continuing
operations per diluted share between $2.70 and $3.00.
Earnings Call and Additional
InformationAdditional second quarter financial
information, including management commentary, is currently
available at www.BBWInc.com. Bath & Body Works,
Inc. will conduct its second quarter earnings call
at 9:00 a.m. Eastern on Aug. 18. To listen, call
1.888.946.7609 (international dial-in number: 1.517.308.9411);
conference ID 6362067. For an audio replay, call 1.800.944.1822
(international replay number: 1.203.369.3872); 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 the #1 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
1,770 company-operated Bath & Body Works locations in the U.S.
and Canada and more than 360 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” 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, 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 COVID-19 pandemic has had and may continue to have an adverse
effect on our business and results of operations;
-
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;
-
difficulties arising from turnover in company leadership or other
key positions;
-
our ability to attract, develop and retain qualified associates and
manage labor-related costs;
-
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 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, 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 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 2021 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 Relations |
Media Relations |
InvestorRelations@bbw.com |
Tammy Roberts Myers |
|
Communications@bbw.com |
BATH & BODY WORKS,
INC.SECOND QUARTER 2022
Total Sales from Continuing Operations
(Millions):
|
SecondQuarter 2022 |
|
SecondQuarter 2021 |
|
%Inc/(Dec) |
|
Year-to-Date 2022 |
|
Year-to-Date 2021 |
|
%Inc/(Dec) |
|
|
|
|
|
|
|
|
|
|
|
|
Stores – U.S. and Canada |
$ |
1,160.4 |
|
|
$ |
1,229.5 |
|
|
(5.6 |
%) |
|
$ |
2,219.6 |
|
|
$ |
2,280.0 |
|
|
(2.6 |
%) |
Direct – U.S. and Canada |
|
366.9 |
|
|
|
407.2 |
|
|
(9.9 |
%) |
|
|
684.4 |
|
|
|
756.4 |
|
|
(9.5 |
%) |
International1 |
|
90.2 |
|
|
|
67.0 |
|
|
34.6 |
% |
|
|
163.4 |
|
|
|
136.8 |
|
|
19.4 |
% |
Total Bath & Body
Works |
$ |
1,617.5 |
|
|
$ |
1,703.7 |
|
|
(5.1 |
%) |
|
$ |
3,067.4 |
|
|
$ |
3,173.2 |
|
|
(3.3 |
%) |
1 – Results include royalties associated with franchised stores
and wholesale sales.
Total Company-Operated Stores:
|
Stores1/29/22 |
Opened |
Closed |
Stores 7/30/22 |
|
|
|
|
|
|
|
|
United States |
1,651 |
|
35 |
|
(17 |
) |
1,669 |
|
Canada |
104 |
|
- |
|
- |
|
104 |
|
Total Bath & Body
Works |
1,755 |
|
35 |
|
(17 |
) |
1,773 |
|
Total Partner-Operated Stores:
|
Stores 1/29/22 |
Opened |
Closed |
Stores 7/30/22 |
|
|
|
|
|
|
|
|
International |
317 |
|
31 |
|
(1 |
) |
347 |
|
International – Travel
Retail |
21 |
|
1 |
|
- |
|
22 |
|
Total
International |
338 |
|
32 |
|
(1 |
) |
369 |
|
BATH & BODY WORKS,
INC.CONSOLIDATED STATEMENTS OF
INCOMETHIRTEEN WEEKS ENDED JULY 30, 2022 AND JULY
31, 2021(Unaudited)(In thousands
except per share amounts)
|
|
2022 |
|
|
|
2021 |
|
Net Sales |
$ |
1,617,503 |
|
|
$ |
1,703,726 |
|
Costs of Goods Sold, Buying and Occupancy |
|
(958,139 |
) |
|
|
(875,348 |
) |
Gross Profit |
|
659,364 |
|
|
|
828,378 |
|
General, Administrative and Store Operating Expenses |
|
(417,534 |
) |
|
|
(444,217 |
) |
Operating Income |
|
241,830 |
|
|
|
384,161 |
|
Interest Expense |
|
(85,675 |
) |
|
|
(96,684 |
) |
Other Income (Loss) |
|
1,531 |
|
|
|
(230 |
) |
|
|
|
|
Income from Continuing Operations before Income Taxes |
|
157,686 |
|
|
|
287,247 |
|
Provision for Income Taxes |
|
37,674 |
|
|
|
71,983 |
|
Net Income from Continuing Operations |
|
120,012 |
|
|
|
215,264 |
|
Income from Discontinued Operations, Net of Tax |
|
- |
|
|
|
158,929 |
|
|
|
|
|
Net Income |
$ |
120,012 |
|
|
$ |
374,193 |
|
|
|
|
|
Net Income Per Diluted Share |
|
|
|
Continuing Operations |
$ |
0.52 |
|
|
$ |
0.77 |
|
Discontinued Operations |
|
- |
|
|
|
0.57 |
|
Total Net Income Per Diluted Share |
$ |
0.52 |
|
|
$ |
1.34 |
|
|
|
|
|
Weighted Average Diluted Shares Outstanding |
|
231,068 |
|
|
|
280,002 |
|
BATH & BODY WORKS,
INC.CONSOLIDATED STATEMENTS OF
INCOMETWENTY-SIX WEEKS ENDED JULY 30, 2022 AND
JULY 31, 2021(Unaudited)(In
thousands except per share amounts)
|
|
2022 |
|
|
|
2021 |
|
Net Sales |
$ |
3,067,413 |
|
|
$ |
3,173,205 |
|
Costs of Goods Sold, Buying and Occupancy |
|
(1,739,473 |
) |
|
|
(1,603,038 |
) |
Gross Profit |
|
1,327,940 |
|
|
|
1,570,167 |
|
General, Administrative and Store Operating Expenses |
|
(806,111 |
) |
|
|
(848,751 |
) |
Operating Income |
|
521,829 |
|
|
|
721,416 |
|
Interest Expense |
|
(175,104 |
) |
|
|
(210,385 |
) |
Other Income (Loss) |
|
3,160 |
|
|
|
(105,416 |
) |
|
|
|
|
Income from Continuing Operations before Income Taxes |
|
349,885 |
|
|
|
405,615 |
|
Provision for Income Taxes |
|
74,968 |
|
|
|
100,000 |
|
Net Income from Continuing Operations |
|
274,917 |
|
|
|
305,615 |
|
Income from Discontinued Operations, Net of Tax |
|
- |
|
|
|
345,194 |
|
|
|
|
|
Net Income |
$ |
274,917 |
|
|
$ |
650,809 |
|
|
|
|
|
Net Income Per Diluted Share |
|
|
|
Continuing Operations |
$ |
1.16 |
|
|
$ |
1.08 |
|
Discontinued Operations |
|
- |
|
|
|
1.22 |
|
Total Net Income Per Diluted Share |
$ |
1.16 |
|
|
$ |
2.31 |
|
|
|
|
|
Weighted Average Diluted Shares Outstanding |
|
237,152 |
|
|
|
282,232 |
|
BATH & BODY WORKS,
INC.ADJUSTED FINANCIAL INFORMATION FROM CONTINUING
OPERATIONS(Unaudited)(In
thousands except per share amounts)
|
Year-to-Date |
|
|
2022 |
|
|
|
2021 |
|
Reconciliation of Reported Net Income from Continuing
Operations to Adjusted Net Income from Continuing
Operations |
|
|
|
Reported Net Income from Continuing Operations |
$ |
274,917 |
|
|
$ |
305,615 |
|
Loss on Extinguishment of Debt |
|
- |
|
|
|
105,464 |
|
Tax Benefit of Special Item |
|
- |
|
|
|
(25,337 |
) |
Adjusted Net Income from Continuing Operations |
$ |
274,917 |
|
|
$ |
385,742 |
|
|
|
|
|
Reconciliation of Reported Earnings from Continuing
Operations Per Diluted Share to Adjusted Earnings from Continuing
Operations Per Diluted Share |
|
|
|
Reported Earnings from Continuing Operations Per Diluted Share |
$ |
1.16 |
|
|
$ |
1.08 |
|
Loss on Extinguishment of Debt |
|
- |
|
|
|
0.28 |
|
Adjusted Earnings from Continuing Operations Per Diluted Share |
$ |
1.16 |
|
|
$ |
1.37 |
|
|
|
|
|
|
|
|
|
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 from Continuing Operations”
provided in the attached reflects the following non-GAAP financial
measures:
Fiscal 2022
In the first and second quarters of 2022, there were no
adjustments to results.
Fiscal 2021
In the second quarter of 2021, there were no adjustments to
results.
In the first quarter of 2021, adjusted results exclude the
following:
- A $105.5 million pre-tax loss ($80.1 million net of tax of
$25.4 million), included in other income (loss), associated with
the early extinguishment of outstanding notes.
The Adjusted Financial Information from
Continuing Operations should not be construed as an alternative to
the reported 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 from
Continuing Operations 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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