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Bath & Body Works, Inc. (BBWI)
:BBWI

Bath & Body Works (BBWI) AI Stock Analysis

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Bath & Body Works

(NYSE:BBWI)

Rating:60Neutral
Price Target:
$30.00
▲(4.13%Upside)
The overall score of 60 reflects a mix of financial instability and valuation attractiveness. The strong earnings call and optimistic guidance boost confidence, but financial challenges and bearish technical indicators introduce caution. The low P/E ratio and solid dividend yield provide a value opportunity, but risks remain due to financial pressures.
Positive Factors
Consumer Engagement
Management noted opportunity to grow sales with most loyal customers while increasing loyalty among more casual shoppers.
Financial Performance
Strong GM Beat; Another Rare, Above-Street Guide with 1Q +160bps YoY (Merch Margin +100bps), indicating a positive inflection from 4Q's decline.
Growth Strategy
North America topline growth remains new management's top priority.
Negative Factors
Earnings Guidance
Growth acceleration and potential margin expansion could take longer than previously expected.
Market Sentiment
Shares reversed primarily driven by disappointing 2Q trends/guidance, implied 2H GM compression, and tariff status-quo actualizing at bottom half of guidance.
Strategic Uncertainty
The path to consistent topline growth levels remains unclear and possibly extended due to strategic changes by new management.

Bath & Body Works (BBWI) vs. SPDR S&P 500 ETF (SPY)

Bath & Body Works Business Overview & Revenue Model

Company DescriptionBath & Body Works, Inc. operates a specialty retailer of home fragrance, body care, and soaps and sanitizer products. The company sells its products under the Bath & Body Works, White Barn, and other brand names through specialty retail stores and websites located in the United States and Canada, as well as through international stores operated by partners under franchise, license, and wholesale arrangements. As of January 29, 2022, it operated 1,755 company-operated retail stores and 338 international partner-operated stores. The company was formerly known as L Brands, Inc. and changed its name to Bath & Body Works, Inc. in August 2021. Bath & Body Works, Inc. was founded in 1963 and is headquartered in Columbus, Ohio.
How the Company Makes MoneyBath & Body Works makes money primarily through the sale of its personal care and home fragrance products. The company's revenue model is centered around its extensive retail network, which includes both physical stores and a robust online presence. Key revenue streams include direct sales from their brick-and-mortar locations, e-commerce platforms, and seasonal product launches that capitalize on consumer trends. Bath & Body Works also benefits from brand loyalty and repeat purchases driven by its popular loyalty programs and marketing campaigns. Strategic partnerships and exclusive product lines further contribute to its earnings, as does the company's agility in responding to consumer preferences and market demands.

Bath & Body Works Earnings Call Summary

Earnings Call Date:May 29, 2025
(Q1-2025)
|
% Change Since: -4.76%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Positive
The earnings call presented a predominantly positive outlook with strong Q1 performance, highlighted by successful collaborations and international growth. While there are challenges such as direct sales declines and tariff impacts, the company remains optimistic about leveraging its innovations and market strategy for future growth.
Q1-2025 Updates
Positive Updates
Strong Q1 Performance
Net sales increased by 3% year-over-year, reaching the high-end of guidance, and earnings per diluted share of $0.49 exceeded expectations.
Successful Disney Collaboration
The Disney collaboration was a major success, exceeding expectations with strong consumer engagement, including 1.8 billion online impressions.
Positive Dual Channel Traffic
Both in-store and online traffic were positive, outperforming third-party benchmarks.
International Sales Growth
International retail sales grew approximately 10% year-over-year.
Strong Gross Margin Expansion
First quarter gross profit rate of 45.4% exceeded expectations with a 160 basis points increase compared to the prior year.
Negative Updates
Challenges with Direct Net Sales
Direct net sales decreased by 4.3% compared to last year, with adjustments for buy online, pickup in-store affecting performance.
Tariff Impact on Inventory and Costs
Inventory levels were slightly above expectations due to tariffs and strategic pull forwards, and tariffs are impacting cost management.
Flat Guidance for Q2
Net sales for Q2 are expected to be flat to 2% growth compared to prior year, reflecting cautious outlook amid some macroeconomic challenges.
Company Guidance
During the Bath & Body Works First Quarter 2025 Earnings Conference Call, the guidance for the fiscal year 2025 was discussed, with net sales growth projected to be between 1% and 3%, and earnings per share (EPS) expected to range from $3.25 to $3.60. The company reported a strong first quarter, achieving net sales of $1.4 billion, up 3% year-over-year, and an EPS of $0.49, which exceeded expectations. International expansion was highlighted as a growth opportunity, with international retail sales growing approximately 10% in the first quarter. The company also emphasized a focus on digital enhancements and packaging improvements as part of its growth strategy. Additionally, Bath & Body Works plans to invest $250 million to $270 million in capital expenditures for the year, while maintaining its commitment to returning value to shareholders, with $300 million in share repurchases planned for 2025.

Bath & Body Works Financial Statement Overview

Summary
Bath & Body Works faces financial challenges with declining revenues and high leverage, evidenced by negative equity. While profit margins are solid, growth is limited, and financial stability is a concern. Stable cash flow provides some cushion against risks, but improvements in revenue growth and equity position are necessary.
Income Statement
58
Neutral
The income statement shows modest performance with a gross profit margin of 44.55% and a net profit margin of 11.11% TTM. However, revenue growth has been inconsistent, with a decline from previous years. EBIT and EBITDA margins are relatively healthy at 17.53% and 21.58% respectively, but overall profitability is under pressure due to declining revenues.
Balance Sheet
35
Negative
The balance sheet is concerning with a negative stockholders' equity indicating financial instability and high leverage. The debt-to-equity ratio is not calculable due to negative equity, and the equity ratio is negative, reflecting more liabilities than assets. These factors suggest financial risk and require attention.
Cash Flow
65
Positive
Cash flow statements reveal stable cash generation with a positive free cash flow of $781 million TTM and a strong operating cash flow to net income ratio of 1.22. However, free cash flow growth is modest, and the company faces challenges in financing activities, indicating cash flow stability but with limited growth potential.
BreakdownTTMMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue7.35B7.31B7.43B7.56B7.88B6.43B
Gross Profit3.27B3.23B3.24B3.25B3.85B3.10B
EBITDA1.58B1.62B1.55B1.61B2.17B2.08B
Net Income816.00M798.00M878.00M800.00M1.33B844.00M
Balance Sheet
Total Assets4.88B4.87B5.46B5.49B6.03B11.57B
Cash, Cash Equivalents and Short-Term Investments636.00M674.00M1.08B1.23B1.98B3.90B
Total Debt4.98B4.96B5.57B6.05B6.01B9.46B
Total Liabilities6.33B6.25B7.09B7.70B7.54B12.23B
Stockholders Equity-1.45B-1.39B-1.63B-2.21B-1.52B-662.00M
Cash Flow
Free Cash Flow781.00M660.00M656.00M816.00M1.22B1.81B
Operating Cash Flow998.00M886.00M954.00M1.14B1.49B2.04B
Investing Cash Flow-155.00M-162.00M-286.00M-328.00M-259.00M-219.00M
Financing Cash Flow-1.06B-1.13B-815.00M-1.56B-3.19B610.00M

Bath & Body Works Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price28.81
Price Trends
50DMA
29.25
Negative
100DMA
31.20
Negative
200DMA
32.06
Negative
Market Momentum
MACD
-0.40
Negative
RSI
53.89
Neutral
STOCH
92.56
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BBWI, the sentiment is Neutral. The current price of 28.81 is above the 20-day moving average (MA) of 27.30, below the 50-day MA of 29.25, and below the 200-day MA of 32.06, indicating a neutral trend. The MACD of -0.40 indicates Negative momentum. The RSI at 53.89 is Neutral, neither overbought nor oversold. The STOCH value of 92.56 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for BBWI.

Bath & Body Works Risk Analysis

Bath & Body Works disclosed 41 risk factors in its most recent earnings report. Bath & Body Works reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Bath & Body Works Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$20.63B17.9350.44%1.06%-0.29%
76
Outperform
$5.60B16.2924.98%3.66%9.80%-6.33%
76
Outperform
$1.44B28.7211.97%9.09%106.50%
SBSBH
70
Outperform
$886.86M4.9729.74%0.17%20.26%
68
Neutral
$5.53B37.69-39.97%2.18%-32.87%
62
Neutral
$16.34B11.01-5.97%3.14%1.65%-24.92%
60
Neutral
$6.10B7.67-52.83%2.79%-0.93%-4.07%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
BBWI
Bath & Body Works
28.81
-9.26
-24.32%
SBH
Sally Beauty
8.79
-1.84
-17.31%
ULTA
Ulta Beauty
459.09
73.14
18.95%
ETSY
Etsy
53.05
-5.67
-9.66%
RVLV
Revolve Group
20.19
4.86
31.70%
MNSO
MINISO Group Holding
17.86
-0.88
-4.70%

Bath & Body Works Corporate Events

Executive/Board ChangesShareholder Meetings
Bath & Body Works Holds Annual Stockholders Meeting
Positive
Jun 5, 2025

On June 5, 2025, Bath & Body Works, Inc. held its Annual Meeting of Stockholders, where key decisions were made, including the election of directors and the ratification of Ernst & Young LLP as the independent registered public accounting firm for the 2025 fiscal year. The stockholders also approved the executive compensation plan, with 98.77% of the shares voting in favor, reflecting strong support for the company’s leadership and strategic direction.

The most recent analyst rating on (BBWI) stock is a Buy with a $45.00 price target. To see the full list of analyst forecasts on Bath & Body Works stock, see the BBWI Stock Forecast page.

Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Bath & Body Works Reports Strong Q1 2025 Results
Positive
May 29, 2025

On May 29, 2025, Bath & Body Works reported a 2.9% increase in net sales to $1.4 billion for the first quarter of 2025, with earnings per diluted share rising 29% to $0.49, surpassing expectations. The company maintained its full-year 2025 guidance of 1% to 3% net sales growth and earnings per diluted share between $3.25 and $3.60. The announcement also highlighted the appointment of Daniel Heaf as CEO, effective May 16, 2025, signaling a strategic focus on growth in the home fragrance and beauty categories.

The most recent analyst rating on (BBWI) stock is a Hold with a $35.00 price target. To see the full list of analyst forecasts on Bath & Body Works stock, see the BBWI Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
Bath & Body Works Amends Credit Facility Agreement
Neutral
May 22, 2025

On May 22, 2025, Bath & Body Works amended and restated its senior secured asset-based revolving credit facility, known as the ABL Facility. This strategic financial move allows the company to borrow in both U.S. and Canadian dollars, with the facility maturing five years post-closing. The ABL Facility is secured by first-priority liens on various assets, including credit card receivables and inventory, and includes covenants that restrict additional indebtedness. This development is expected to impact Bath & Body Works’ financial flexibility and operational strategy, potentially influencing its market positioning and stakeholder interests.

The most recent analyst rating on (BBWI) stock is a Hold with a $35.00 price target. To see the full list of analyst forecasts on Bath & Body Works stock, see the BBWI Stock Forecast page.

Executive/Board ChangesFinancial Disclosures
Bath & Body Works Appoints New CEO Daniel Heaf
Positive
May 19, 2025

On May 19, 2025, Bath & Body Works announced the appointment of Daniel Heaf as the new Chief Executive Officer, effective May 16, 2025, succeeding Gina Boswell. Heaf, who has a strong background in driving growth and transformation at Nike and Burberry, is expected to lead the company into its next chapter of growth. The company also pre-announced its first quarter 2025 results, reporting net sales of $1.4 billion and earnings per diluted share of $0.49, meeting and exceeding guidance expectations, while maintaining its full-year outlook.

The most recent analyst rating on (BBWI) stock is a Hold with a $35.00 price target. To see the full list of analyst forecasts on Bath & Body Works stock, see the BBWI Stock Forecast page.

Business Operations and Strategy
Bath & Body Works Hosts Investor Tour in Ohio
Positive
Apr 17, 2025

On April 17, 2025, Bath & Body Works hosted an investor tour at its Beauty Park in Columbus, Ohio, showcasing its strategic advantages in agility, innovation, and supply chain management. The event highlighted the company’s integrated development and production capabilities, emphasizing its ability to launch new products swiftly and maintain a strong market position through its vertically integrated supply chain.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 21, 2025