Bath & Body Works missed Wall Street estimates for second-quarter profit on Thursday, hurt by higher costs at a time when the retailer grapples with uncertain discretionary consumer spending.
Shares of the beauty and skincare retailer slumped 6% in premarket trading.
The company, which sells higher-priced offerings such as fragrances and scented candles, is facing pressure from customers cutting back on spending amid inflation and a fallout from the Trump administration’s trade policy.
U.S. consumer spending rose in June and July but growth in the third quarter this year is expected to be constrained by a softening labor market and higher prices of goods.
The company has ramped up marketing and promotional efforts to position its products as affordable luxuries and ideal gifts, including launching a Disney villains-themed product line aimed at Halloween season sales, and ceramic scented candles.
For the second quarter, the company recorded $483 million in general, administrative and store operating expenses or a 9% rise for the quarter.
Bath & Body Works, however, is largely insulated from the tariffs, given it sources the majority of its merchandise locally, unlike many of its peers.
Still, Bath & Body Works’ exposure to China is about 10% of its supply, while Canada and Mexico represent about 7% combined, split almost equally, as of February.
The company also narrowed its annual adjusted profit per share forecast range to be between $3.35 and $3.60 from a range of $3.25 to $3.60 to account for current tariff rates.
Bath & Body Works posted an adjusted profit of 37 cents per share for the quarter ended August 2, compared with analysts’ average estimate of 38 cents per share, according to data compiled by LSEG. Its quarterly net sales of $1.55 billion were in line with estimates.
By Neil J Kanatt; Editior Leroy Leo
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