Bath & Body Works stock sinks on Q2 guidance

Shares of Bath & Body Works (BBWI) are falling sharply after issuing disappointing second quarter guidance. The retailer's first quarter earnings topped estimates while revenue was in line with Street expectations. For the second quarter, Bath & Body Works sees net sales between a decline of 2% to flat and diluted earnings per share between $0.31 and $0.36.

Yahoo Finance's Madison Mills and Brad Smith recap the retailer's quarter in the video above.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Stephanie Mikulich.

Video transcript

We're going to move to another company here.

Because Bath and body work shares are sinking this morning after its second quarter sales forecast coming in below expectations.

Now expecting a decline of 2% to flat moving forward now, the company did slightly boost the bottom end of its earnings guidance for the full year.

But we all know we're always looking for that top line number for these companies, and they did not deliver on that top line number.

That is why we're seeing body works down over 7% in the pre market trade.

Here they again have better than expected results across the board.

But their Q one outlook was spooky for investors, and we're seeing shares down off of that.

Their net sales were also down.

We're seeing nearly 8000 call options on this name ahead of the market open.

Yeah, it kind of stinks honestly, and here's why.

You look at the broader environment from the amount of people that are spending into little luxuries right now.

That scented candle little luxury that added, you know, hair wash or any of the kind of body gels that you might be using a little luxury that people are tapping into.

You're hearing success in parts of other businesses, and bath and body works is signalling, and it's outlook that it's gonna be weaker than expected.

That's not good for shareholders who are trying to evaluate OK, if a consumer spending into this, that means that they're trading away from your brand right now, especially if other companies are saying something that is counter to the guidance that you're putting out as of this time.

So all of that in mind, uh, putting a little bit of a number on this?

They said it was a strong start to the year please, though, to narrow their full year guidance range while raising the midpoint for the top and bottom line.

So it's gonna be interesting to see how they meet that and where.

Ultimately, some of the concerns sentiment shifts towards when you're spending into, uh, the little luxuries of everything from body scrubs, facial oils and I don't know whatever makes people self care Saturday come to life.

Well, it's a great point, and I know you talk about this a lot on your show wealth as well, right?

It's this idea that consumers are starting to struggle, particularly on the low end and a bath and body works is a more economic brand.

So it's not really that surprising when you see this stock struggling a little bit today.