(CTN News) – A spokesman for Bath & Body Works warned on Wednesday that the company will see its annual sales decline even more as Americans put off buying the company’s more expensive home fragrances and personal care products as there is still high inflation pinching household budgets.
As a result of the retailer’s forecast of lower current-quarter sales and profit than Wall Street expected in premarket trading, shares of the Ohio-based company fell about 2% in premarket trading.
There has been an increase in the cost of living and a rise in credit repayments at higher borrowing costs in the U.S., leading consumers to cut back on their purchases Bath & Body of non-essential items due to the rising cost of living. Due to this, the demand for products such as home fragrances and beauty and skincare products has slowed down.
It is notable that Macy’s has also warned of weak consumer spending throughout the remainder of the year, which is in line with the forecasts made by specialty retailer Estee Lauder and department store chain Macy’s.
In its most recent outlook, Bath & Body Works expects its net sales to fall between 1.5% and 3.5% from last year, compared with its previous forecast of flat net sales to a mid-single-digit percentage decline from last year.
Due to the surge in labor and production costs, the retailer was forced to increase the price of its products to offset the pressure on margins resulting from rising labor and production costs, further discouraging American shoppers from making purchases.
Based on Refinitiv IBES data, the company’s sales fell 3.6% to $1.56 billion in the second quarter, which was in line with Street expectations, according to the company.
In the quarter ended March 31, the company earned 40 cents per share, exceeding analysts’ Bath & Body expectations of 33 cents per share, when items were excluded from the earnings.
According to the company’s latest Bath & Body profit forecast, adjusted earnings per share for the current quarter are expected to range between $2.80 and $3.10, compared to the $2.68 and $3.08 that were previously expected.