An analyst has cautioned that Bath & Body Works’ lower-than-expected forecasts on the top and bottom lines could give a billionaire activist investor some “ammunition” in its proxy battle.
Bath & Body Works beat analyst forecasts in the fourth quarter, but Wall Street zoomed in on the outlook and while Neil Saunders, managing director of GlobalData, believes a large chunk of the pessimism in the forecast is down to external economic factors, he cautioned that it will give some ammunition to Third Point, which is trying to nominate candidates to the board.
During an analysts’ call to discuss earnings, Bath & Body executives stated at the beginning that they did not want to talk about Third Point, but issued a statement late Wednesday. The statement said: “It is unfortunate that Third Point has chosen to announce its intent to pursue a costly public proxy fight despite the board’s good faith engagement efforts over the past several months.”
It now expects first-quarter net sales to decline by low- to midsingle digits, while earnings per diluted share are expected to be between 17 cents and 27 cents, below analysts’ forecasts of 44 cents. Full-year EPS guidance came in between $2.50 and $3, also lower than Wall Street’s bet for $3.60
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