Bath & Body Works shares up 25% on Q3 results: should you take profits?

Bath & Body Works Inc (NYSE: BBWI) jumped nearly 25% in extended trading after the retail chain reported better-than-expected results for its fiscal third quarter.

Should you sell Bath & Body Works shares into the strength?

Investors are also rewarding the raised future guidance.

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Bath & Body Works now expects to earn $3.0 a share to $3.20 a share this year, including up to $1.65 in Q4, as per the earnings press release. In comparison, analysts were at $1.54 for the quarter and $2.89 for fiscal 2022 as a whole.

But that’s not sufficient to get Victoria Greene (G Squared Private Wealth) excited about the Bath & Body Works shares. On CNBC’s “Power Lunch”, she said:

I can’t get on board with it. It’s burning free cash flow, cash on hand has dwindled the past three quarters versus a debt at $6.0 billion. Sales are 5.0% lower. I just don’t see the catalyst other than that it’s cheap, but it might be cheap for a reason.

She expects to stock to be range bound between $30 and $40.

Then, of course, there’s fear of a recession and it remains to be known how well beauty products and personal-care items hold up in the face of a consumer slowdown.

Bath & Body Works tops estimates in its third quarter

• Net income was cut nearly in half from $177 million to $91 million
• Per-share earnings also fell significantly from 66 cents to 40 cents
• Revenue at $1.60 billion was also down 5.0% versus a year ago
• Consensus was 20 cents a share of EPS on $1.56 billion in revenue

Bath & Body Works Inc has been committed to cutting costs in recent months. Earlier in November, it named Gina Boswell as its new Chief Executive to take the helm on December 1^st.

At $39, Bath & Body Works shares in after-hours are trading just below their 200-day Moving Average. The retail stock is still down nearly 45% for the year.