Bath & Body Works stock soars on earnings beat ahead of Thursday's closing bell

By Remy Blaire

Wall Street settled higher for the second session in a row. The Dow Jones Industrial Average (^DJI) managed to add another triple-digit gain heading into the closing bell, tracking the Nasdaq and S&P 500 into positive territory. The Nasdaq-100 (IXIC) extended its surge higher bringing its advance above 25% YTD.

Retailer earnings are painting a mixed picture on consumer spending across the nation. Discretionary spending patterns were reflected in quarterly results for Walmart (WMT), Target (TGT) and Home Depot (HD). One retailer shrugging off analyst skepticism over discretionary purchases is Ohio-based Bath & Body Works (BBWI). Shares of the company rallied over 10% with trading volume coming in at over three times the daily average, after it reported fiscal Q1 earnings that topped estimates and as it raised its full-year guidance.

The maker of body care products and home fragrances is expanding its lineup to include men’s grooming items, haircare, and laundry. Bath & Body Works found success with its customer loyalty program, limited edition product drops, and addition of natural product formulations.

The retailer offers a dizzying array of fragrances for everyday hand soap and hand sanitizer, from Firecracker Fizz, Wildberry Lemonade to Poolside Pomelo. Bath & Body Works hopes to boost revenue in 2023 with the addition of essential household items to its product lineup – including scented shampoo and detergents.

Video transcript

SEANA SMITH: Shares of Bath & Body Works among the big winners on Wall Street today-- Yahoo Finance contributor Remy Blaire is on the floor of the New York Stock Exchange with the details. Remy?

REMY BLAIRE: Well, in today's trading session, we saw the major US equity averages trade on a mixed note. And as we head into the close, we are seeing continued mixed trading for the major equity averages. But as you mentioned, one stock that we've been watching here on the trading floor is Bath & Body Works. Shares of the company popped by as much as 10%. And this came on the heels of its fiscal first quarter results.

This week, we've been getting earnings out from the big-box retailers. And we've been getting insight into the American consumer. But Bath & Body Works has been bucking the trend when it comes to discretionary spending. The maker of scented body care products, as well as home fragrance items, reported a fiscal Q1 beat, and also raised its guidance for the full year. While sales for the quarter were down from a year ago, they were higher by a whopping 50% compared to the first quarter of 2019, before the pandemic.

Now, CEO Gina Boswell mentioned in an analyst call that its customers took to limited product drops at its stores as well as new natural formulations for its body care products. In addition, its loyalty program has attracted 37 million members. And it currently offers perks, as well as promos, to its customers.

The company also plans to launch grooming products for men. And it comes on the heels of high demand, as well as success, for its men's fragrance business. The company expects to expand into face, as well as beard, care ahead of Father's Day this year, and also plans to expand into men's hair and shaving products later in 2023.

Later on this month, as well as next week, we will be getting other retail earnings out from Lowe's, as well as Kohl's and Nordstrom, giving us a better idea of discretionary spending for consumers.

SEANA SMITH: We'll be looking forward to that because, certainly, we have certainly seen a pullback here in a number of the names that have reported this week. Remy, thanks so much.