On Tuesday, Citi reaffirmed its Neutral rating on Bath & Body Works Inc. (NYSE:BBWI) while maintaining the established price target of $48.00. The financial institution anticipates first-quarter earnings per share (EPS) to surpass consensus estimates, driven by improved gross margins and sales figures. Analysts at Citi project a first-quarter EPS of $0.38, which is higher than the consensus estimate of $0.33, attributing the increase to a stronger gross margin—up by 90 basis points compared to the flat consensus—and slightly higher sales.
Despite the expected outperformance in the first quarter, Citi forecasts that management will reiterate its full-year 2024 EPS guidance range of $3.00 to $3.35, aligning with the consensus estimate of $3.31. Additionally, second-quarter EPS guidance is anticipated to be consistent with or slightly below the consensus of $0.38. Looking forward into fiscal year 2024, Bath & Body Works is seen to benefit from several margin tailwinds, including reduced product costs and cost savings, which could foster margin expansion and EPS growth even with a conservative revenue outlook. The projection for the year includes flat to a 3% decrease in top-line revenue, with expectations for a downturn in the first half but an uptick in the second half.
Citi notes that the current environment of consumer volatility may lead management to maintain conservative guidance. The market's attention is expected to center on near-term trends and whether new product initiatives, such as the Bridgerton collaboration and fine fragrance mists, can catalyze an earlier-than-expected improvement in comparable store sales.
InvestingPro Insights
As Bath & Body Works Inc. (NYSE:BBWI) navigates through a period of consumer volatility, the company's financial stability and performance metrics provide a clearer picture of its market position. According to InvestingPro data, Bath & Body Works boasts a solid market capitalization of $10.86 billion, underpinning its significance in the retail sector. The company's P/E ratio stands at 12.63, reflecting investor sentiment on its earnings potential relative to its share price. Notably, the firm has demonstrated a robust gross profit margin of 43.56% over the last twelve months as of Q4 2024, suggesting efficient cost management and a strong pricing strategy.
InvestingPro Tips highlight Bath & Body Works' consistent dividend payments for 52 consecutive years, a testament to its financial resilience and commitment to shareholder returns. Additionally, the company's liquid assets surpassing short-term obligations indicate a healthy liquidity position, which is crucial for meeting immediate financial needs. For investors looking for more comprehensive analysis and additional tips, InvestingPro offers an extended list of insights. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore the full range of InvestingPro Tips related to Bath & Body Works at: https://www.investing.com/pro/BBWI.
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