(Reuters) - Bath & Body Works (NYSE:BBWI) lowered its annual sales forecast on Thursday on signs of slowing demand ahead of the crucial holiday season, as customers cut back spending on non-essential items like the specialty retailer's candles and soaps.
High living costs paired with sticky inflation has made consumers tighten their budgets when it comes to discretionary items, as they prioritize spending on groceries and food over pricier home fragrances and personal care products.
Analysts have noted the company's product offerings have limited room for growth and are not recession-resistant as they come at high price points.
The retailer expects its 2023 net sales to fall by 2.5% to 4%, compared with its previous forecast for a decline of 1.5% to 3.5%. Analysts on average expect a decline of 2.07%, according to LSEG data.
The beauty and skincare firm also tightened its forecast for annual adjusted earnings, expecting a profit of $2.90 to $3.10 per diluted share, versus a prior projection of $2.80 to $3.10.
Bath & Body Works earned 48 cents per share excluding one-time items in the third quarter ended Oct. 28, topping analysts' average estimate of 35 cents per share.
"Our performance in the quarter was marked by strong merchandise margin improvement and the ongoing benefits of our cost optimization initiatives," said CEO Gina Boswell.
The Ohio-based company's net sales fell 2.6% to $1.56 billion in the quarter, in line with analysts' estimates.