BBWI announces 7% repurchase + divvy bump + nice Q4
Bath & Bodyworks awards shareholders and future looks great
BBWI isn’t announcing Q4 results till Feb. 24 but hit us with a nice press release this AM. For those of you new to the newsletter, my last post on Bath and BodyWorks has a quick summary on the thesis and how I project the stock to be a double from here (TL;DR - they end up at $2.5bn of EBITDA eventually at 15x+ multiple). Here’s the summary from today’s release:
Driven by our focus on staying close to our customers and our commitment to operational excellence, Bath & Body Works achieved record sales and earnings during the fourth quarter. Importantly, we are ending the fiscal year with approximately $2 billion in cash, and our strong balance sheet is allowing us meaningful opportunities to drive enhanced value for our shareholders…
The company expects to report fourth quarter earnings per share from continuing operations of approximately $2.25, compared to its initial guidance of $2.10 to $2.25 per share…
The company also announced approval by the Board of Directors of certain actions with respect to capital structure, including:
The authorization of a new $1.5 billion share repurchase program, $1.0 billion of which we plan to execute through an accelerated share repurchase this week. This follows the completion of the company’s previous $1.5 billion share repurchase authorization, with nearly $2 billion, or approximately 10 percent of shares outstanding as of Jan. 30, 2021, repurchased in fiscal 2021.
The authorization of a 33 percent increase in the company’s annual dividend to $0.80 per share.
So to summarize - buyback THIS WEEK of ~7% of the float at current stock price, 33% dividend increase (we’ll end up at about a 1.3% yield) and record earnings that came in at the high end of guidance (as noted in last post, Street had $2.27 and they did $2.28 excluding impact of tornado that destroyed some inventory).
Notably, I didn’t see any commentary on the impact of supply chain. BBWI is trucking along and had an amazing Q4 when other retailers missed the mark and blamed it on supply chain (looking at you ANF). Operating performance continues to be excellent.
My takeaway from today is management is trying to turn some heads through the capital return program via buybacks and dividend increases. A one time 7% buyback (assuming the stock doesn’t skyrocket) doesn’t happen too often, nor does a 33% dividend bump.
One more thing hidden in this release - the company’s international growth in 2021 is very nice:
That’s 288 stores last year to 338 as of 1/29 (+17% increase). I’m very excited about the international growth story for Bath & BodyWorks.
Overall, a press release shareholders should be pumped about and the long-term story remains exciting (recall 25%+ operating margin guidance, secret SaaS business via candles and scents, gaining traction outside US).