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Earnings Results: Bath & Body Works stock retreats after weaker outlook

Bath & Body Works Inc. stock fell more than 3% in extended trading Wednesday after the retailer reported better-than-expected second-quarter earnings but guided for lower profits in the current period as it navigates “the challenging environment and inflationary pressure” affecting customers and the business.

Bath & Body Works

said it earned $120 million, or 52 cents a share, in the quarter, compared with earnings of $374 million, or $1.34 a share, in the year-ago quarter. Sales fell 5% to $1.62 billion.

FactSet consensus called for earnings of 41 cents on sales of $1.62 billion.

Bath & Body Works, spun off from Victoria’s Secret’s parent company a year ago, forecast third-quarter earnings from continuing operations to be between 10 cents a share and 20 cents a share. That contrasts with Wall Street expectations around 29 cents a share, according to FactSet.

For fiscal 2022, the company forecast earnings from continuing operations between $2.70 a share and $3 a share; analyst consensus calls for $2.91 for the year.

“While we are taking aggressive action to control costs and improve overall efficiencies, we remain focused on customer-facing investments,” including the launch of a loyalty program, interim Chief Executive Sarah Nash said in a statement.

Inventories for fall and the holidays are “well-positioned to resonate with our customers,” Nash said. Product development and an integrated supply chain mostly in North America “provide us with the agility to chase into key winners during the season,” Nash said.

Bath & Body Works is pursuing “a number of initiatives to improve financial performance and better position the organization for long-term growth,” including a reorganization, more cost controls and margin improvements, the company said.

The moves are expected to save the retailer about $30 million in the second half of the year, not including costs related to severance pay, it said. Severance costs and other associated charges are expected to be around $6 million in the third quarter, the retailer said.

Bath & Body Works stock has lost 42% so far this year, compared with losses of around 10% for the S&P 500 index

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