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Bath & Body Works Surpassed Estimates in Q4, but Fell Short on Predictions for the Current Quarter

This comes as the retailer is facing a proxy battle from billionaire investor Daniel Loeb.

Bath & Body Works beat analysts’ forecasts on the top and bottom lines in the fourth quarter, but fell short on predictions for the coming three months amid a looming proxy battle with billionaire investor Daniel Loeb.

One day after Loeb’s Third Point fund called for shareholder representative on the board to ease concerns about the company’s corporate governance and decision-making processes, the retailer reported net sales of $2.89 billion for the fourth quarter ended Jan. 28. This represented a decrease of 5 percent compared with a year earlier, but beat Wall Street forecasts for $2.8 billion.

Net income was $428.2 million, compared to $592.6 million last year. The company reported earnings per diluted share of $1.86, compared to $2.27. Analysts had been expecting $1.62 per share.

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Gina Boswell, the new chief executive officer of Bath & Body Works, said, “The team delivered better-than-expected earnings results despite a challenging macroeconomic environment, which is a testament to the strengths of this organization. Our customer base responded well to our holiday season, in part powered by our loyalty program, which now exceeds 33 million members. In addition, we continued to be disciplined in our expense and inventory management.”

The company expects first-quarter net sales to decline by low- to mid-single digits, while earnings per diluted share are expected to be between 17 cents and 27 cents, below analysts’ forecasts of 44 cents.

At the same time, the company said that it is undertaking an enterprise-wide effort to reduce expenses and improve operating efficiency in the business. It is targeting $200 million of annual cost savings, with more than half of those savings contemplated in its 2023 outlook, primarily impacting the second half of the year.

In August, Bath & Body Works said it had eliminated about 130 roles, the majority of which were leadership positions, as it pursues “a number of initiatives to improve financial performance and better position the organization for long-term growth.”

The company was formed a year before that in August 2021, when the former L Brands split into two entities: Victoria’s Secret and Bath & Body Works. Each company trades individually on the New York Stock Exchange. Bath & Body Works was number 14 on WWD Beauty Inc’s most recent Top 100 Beauty Manufacturers list, with $4.6 billion in sales for calendar 2021.