(Reuters) -Bath & Body Works on Monday raised its forecast for full-year adjusted profit and projected a smaller drop in annual sales on strong demand for its candles and fragrances during the holiday season, sending the retailer's shares up about 22%.
The Ohio-based company introduced new products including its new winter range of fragrances such as Winter Candy Apple (NASDAQ:AAPL) and Frosted Coconut Snowball to keep up with competition and help tackle softer demand in the retail industry in the quarter.
An uptick in sales during the reported quarter, especially for fragrances, can be attributed to the company's efforts to push the brand as affordable luxury, particularly among younger customers.
"We believe we are well-positioned to navigate a volatile retail environment and shorter holiday calendar," CEO Gina Boswell, said adding the company was well positioned for any tariff fluctuations during Donald Trump's presidency as 85% of products are manufactured in North America.
Bigger rivals Estee Lauder (NYSE:EL) and L'Oreal faced waning demand as consumers restrained spending on their premium beauty products and upmarket lipsticks and perfumes.
"Innovation in the offering is resonating with the consumer, with momentum building heading into the all-important holiday season," Telsey Advisory Group analyst Dana Telsey said.
Bath & Body Works (NYSE:BBWI) now expects net sales to shrink to a range of 1.7% to 2.5% for fiscal 2024, compared with a prior forecast of a 2% to 4% decline.
The company also forecast annual adjusted earnings per share between $3.15 and $3.28, compared with a prior forecast of between $3.06 and $3.26.
On an adjusted basis, Bath & Body Works posted a profit of 49 cents per share for the third quarter, above analysts' average estimates of 47 cents per share, according to data compiled by LSEG.
The company's quarterly sales also rose by a better-than-expected 3% to $1.61 billion.