By Dhirendra Tripathi
Investing.com – Bath Body Works stock (NYSE:BBWI) jumped 7% Thursday as the retailer of fragrances and accessories reported sales and profit that were ahead of third-quarter estimates.
The company said it experienced growth in fragrant body care, home fragrance and gifting and accessories. As expected, soaps and sanitizers, coming off heightened purchases last year because of the pandemic, declined.
For the same reason, direct sales also fell, by 17%, to $369 million.
The company it saw good customer response to its fall seasonal and Halloween merchandise and customer feedback to its two new fragrances, Fairytale and Open Sky, exceeded its expectations.
Gross margin rate fell 80 basis points to around 50% but the fall wasn’t as steep, thanks to the company controlling expenses on promotions. Price increases also helped to offset higher supply chain and transportation costs.
The company closed the quarter with 30% more inventory and said it is satisfied on that front as it heads into the busy holiday season.
Bath & Body Works expects current-quarter sales to rise by around 8% and adjusted profit per share to come in at around $4.38.
An optimistic outlook notwithstanding, the company did warn about inflation and high raw material prices playing spoilsport. The company estimates its cost of raw materials, supply chain and transportation expenses to be higher by around $100 million in the fourth quarter.
Third-quarter net sales of $1.68 billion were lower than last-year quarter’s $1.7 billion.
Adjusted profit per share of 92 cents was higher than last time’s 83 cents.