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Bath & Body Works stock surges on strong earnings, higher guidance

Yahoo Finance Live anchors discuss third-quarter earnings for Bath & Body Works.

Video transcript

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BRIAN SOZZI: The earnings keep rolling in. Let's check it on some of our trending tickers. Starting with Bath & Body Works, shares of the specialty retailer are in focus, following the company's third-quarter earnings that topped estimates on the top and bottom lines. The company also raised its full-year profit outlook.

And I love this headline from the team over at-- I think it's Ike Boruchow at Wells Fargo. He says this quarter "sanitized the bear case on the stock." I can't get any better than that. That's like a title outright when I was still a research analyst. I love that. Good for him.

BRAD SMITH: [LAUGHS]

BRIAN SOZZI: Ike's my guy.

BRAD SMITH: Well, I mean--

BRIAN SOZZI: "Sanitized the bear case."

BRAD SMITH: That is good. That caught me off guard a little bit.

BRIAN SOZZI: It's good.

BRAD SMITH: But that's really good. The company is saying, looking forward through the remainder of the year and beyond. They like the assortment. Good mix, holiday favorites, giftable offerings.

I mean, the holiday quarter is a big one. It's so easy to just give somebody a candle. And I guess that's where they're gonna see some strength in this quarter. But they're finding some other strength or at least confidence in the customer, and particularly here, in their expense management here.

And that's what's gonna be critical. We were talking about this with Macy's and to some extent Kohl's. But the inventory management as well over an extended period of time.

JULIE HYMAN: Yeah, I mean, we-- you know, we keep talking about how retail is not a monolith. And here's yet another example of that, right? The company raising its forecast to $3.00-- to $3.20 a share from continuing operations for full year 2023. That's better than estimated. That's better than the company had predicted.

One of the analysts calls out the loyalty program at Bed Bath & Beyond. That's Ashley Helgans over at Jefferies, saying that there are now 21 million people signed up in that program. And as with most loyalty programs, those people spend more. So the more of them there are, the better it is.

BRIAN SOZZI: You're the one with the house on set. Me and Brad, we don't-- we don't have a house. Are candles popular? What is it about candles? I mean, I know everybody buys candles. But this quarter suggests people are back in the store every weekend buying candles. And maybe they're just using up their candles each week.

JULIE HYMAN: What do they mostly sell? Do they mostly sell candles or are they mostly sell body lotion

BRIAN SOZZI: It's candles. It's lotions.

JULIE HYMAN: It's body care, right?

BRIAN SOZZI: I didn't realize they start out with guys cologne now.

JULIE HYMAN: I don't know what the mix is--

BRAD SMITH: Bullish self-care, though.

JULIE HYMAN: --in terms of candles versus other stuff.

BRIAN SOZZI: So making your home-- this the home sanctuary play.

BRAD SMITH: It is. It's the home sanctuary play. It's the self-care play, if you will, as well to some extent with all of the other-- the bath side of this. I mean, candles can go anywhere in the house, but it's the body side as well that you're taking care of if you go to Bath & Body, I suppose.

BRIAN SOZZI: [LAUGHS] Girl, you're going down the rabbit hole.

BRAD SMITH: Yeah, I tried to pull it together. But--

BRIAN SOZZI: [LAUGHS]

BRAD SMITH: --look, I mean, I don't know.

BRIAN SOZZI: It's the set the-- set the mood play.

BRAD SMITH: It's more than candles. It's not just an "all you can smell" loyalty.

BRIAN SOZZI: A Netflix and chill play. We got all-- a little bit of everything here with Bath & Body Works.

JULIE HYMAN: And I-- actually, did you guys spot what their inventory build was? I did not. I didn't spot that in the release. I'm trying to--

BRIAN SOZZI: Oh, don't make me calculate it right now, Julie.

JULIE HYMAN: I'm sorry. I'm sorry. But--

BRIAN SOZZI: On live TV.

JULIE HYMAN: I am personally not a smelly candle girl. They--

BRAD SMITH: It's got to be the right smell.

JULIE HYMAN: Well, and they-- it's-- you always-- I don't know. Well, that's a--

BRIAN SOZZI: I'm keywording inventory. I'll get back to you soon.

JULIE HYMAN: I'm keywording inventory, too, and I didn't find it. So I don't know. Oh, our-- we're getting a little bit of color here from producer McKenzie Degroot. Only goes there for candles and for hand sanitizer, not for the lotions. So there you go.

BRAD SMITH: Interesting.

JULIE HYMAN: So--

BRIAN SOZZI: You learn something every day.

JULIE HYMAN: Yes, we do.

BRAD SMITH: Wow.

JULIE HYMAN: We've got the opening bell on Wall Street coming.

BRIAN SOZZI: Oh, there we go. Is that inventory?

JULIE HYMAN: Oh. Oh.

BRIAN SOZZI: My man Conor Hickey throwing that up there on the board. 10% year-over-year.

JULIE HYMAN: 10.4% not bad.

BRIAN SOZZI: Not bad.

JULIE HYMAN: Look at that.

BRIAN SOZZI: Our guy.

JULIE HYMAN: All right.