olivLaw · US equity research
Bath & Body Works, Inc. BBWI
Retail-Retail Stores, NEC · SIC 5990 · Vertical: Retail-Retail Stores, NEC (SIC 5990)
Bath & Body Works is a global leader in body care and home fragrance, with a large fleet of company-operated stores in North America and a loyalty program with active members. The company is in a multi-year transformation called the Consumer First Formula, while sales are slipping and margins are under pressure from tariffs and costs, with fiscal 2025 total net sales of 7291 million dollars.
At the close of 04 Nov 2026, Bath & Body Works, Inc. (BBWI) stock was 23.54 USD (+4.11% on the day), with market capitalisation 4.7 bn USD, P/E 6.1 on diluted EPS of 3.84 USD over the last 12 months, dividend yield 3.40%, beta 1.39, 52-week range 14.85–24.67 USD. Latest reported quarter (Q2 2027): revenue of 1.5 bn USD (−2.3% YoY), net income of 118.0 m USD (+84.4% YoY), diluted EPS 0.58 USD.
Data as of · AI analysis dated · Source: SEC filings and closing prices, computed by olivLaw.
Price history
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Technical reading
- RSI (14)
- 71.2
- overbought (≥ 70)
- Bollinger (20, 2)
- 16.84 – 24.48
- in the upper half of the band · %B 0.88 · band width 37.0%
- SMA 50 / 200
- 18.83 / 19.84
- mixed trend
- MACD (12, 26, 9)
- 1.36 / 1.11
- MACD above signal
Indicators describe past prices; on their own they do not predict direction. On our history the RSI ≤ 40 filter added no return (see the signals methodology).
Performance
| Company | S&P 500 | vs S&P 500 | Vertical median | |
|---|---|---|---|---|
| 1 month | +34.8% | −1.1% | +35.9 pp | — |
| 3 months | +13.2% | −0.5% | +13.7 pp | — |
| 6 months | +22.6% | +4.4% | +18.2 pp | — |
| Year to date | +17.2% | +12.3% | +4.9 pp | — |
| 1 year | −0.3% | +13.5% | −13.8 pp | −26.6% |
| 3 years | −27.8% | +76.4% | −104.2 pp | −49.3% |
| 5 years | −68.7% | +63.7% | −132.4 pp | — |
Price returns, dividends excluded.
Quarterly results
Latest quarter: Q2 2027 · 01 Aug 2026
Quarterly margins
Quarterly statements · USD
| Fiscal year | Q3 '25 | Q4 '25 | Q1 '26 | Q2 '26 | Q3 '26 | Q4 '26 | Q1 '27 | Q2 '27 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 1.6 bn | 2.8 bn | 1.4 bn | 1.5 bn | 1.6 bn | 2.7 bn | 1.4 bn | 1.5 bn |
| Cost of revenue | 910.0 m | 1.5 bn | 778.0 m | 909.0 m | 936.0 m | 1.5 bn | 791.0 m | 822.0 m |
| Gross profit | 700.0 m | 1.3 bn | 646.0 m | 640.0 m | 658.0 m | 1.2 bn | 587.0 m | 692.0 m |
| SG&A | 482.0 m | 623.0 m | 437.0 m | 483.0 m | 497.0 m | 645.0 m | 356.0 m | 476.0 m |
| Operating income | 218.0 m | 678.0 m | 209.0 m | 157.0 m | 161.0 m | 599.0 m | 231.0 m | 216.0 m |
| Interest expense | 77.0 m | 76.0 m | 71.0 m | 68.0 m | 68.0 m | 68.0 m | 69.0 m | 63.0 m |
| Pre-tax income | 145.0 m | 611.0 m | 146.0 m | 95.0 m | 103.0 m | 538.0 m | 166.0 m | 164.0 m |
| Income tax | 39.0 m | 158.0 m | 41.0 m | 31.0 m | 26.0 m | 135.0 m | -17.0 m | 46.0 m |
| Net income | 106.0 m | 453.0 m | 105.0 m | 64.0 m | 77.0 m | 403.0 m | 183.0 m | 118.0 m |
| Diluted EPS | 0.49 | 2.11 ≈ | 0.49 | 0.30 | 0.37 | 1.99 ≈ | 0.90 | 0.58 |
| Operating cash flow | -99.0 m ≈ | 955.0 m | 188.0 m | -43.0 m ≈ | 80.0 m ≈ | 877.0 m | 244.0 m | 72.0 m ≈ |
| Capex | 65.0 m ≈ | 60.0 m | 37.0 m | 56.0 m ≈ | 81.0 m ≈ | 63.0 m | 49.0 m | 49.0 m ≈ |
| Dividends paid | 44.0 m | 43.0 m | 42.0 m | 43.0 m | 41.0 m | 41.0 m | 40.0 m | 40.0 m |
| Share repurchases | 101.0 m ≈ | 52.0 m | 136.0 m | 118.0 m ≈ | 90.0 m ≈ | 57.0 m | 0 | 0 ≈ |
≈ derived quarter (cumulative difference / share-days average)
E/P over time
E/P = trailing-12-month diluted EPS / price at quarter end. E/P is the inverse of P/E and stays defined when earnings are negative.
Today's P/E sits at the 6 percentile of its own 36-quarter history (min 5.2, median 10.2, max 15.0; quarters with earnings only).
Fiscal years
| Fiscal year | 2019 | ⚠ 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 13.2 bn | 5.4 bn | 6.4 bn | 7.9 bn | 7.6 bn | 7.4 bn | 7.3 bn | 7.3 bn |
| Revenue YoY | +4.8% | — | +19.0% | +22.5% | −4.1% | −1.7% | −1.6% | −0.2% |
| Net income | 644.0 m | -366.0 m | 844.0 m | 1.3 bn | 800.0 m | 878.0 m | 798.0 m | 649.0 m |
| Net income YoY | −34.5% | — | unavailable | +57.9% | −40.0% | +9.7% | −9.1% | −18.7% |
| Diluted EPS | 2.31 | -1.32 | 3.00 | 4.88 | 3.43 | 3.84 | 3.61 | 3.11 |
| Diluted EPS YoY | −32.5% | — | unavailable | +62.7% | −29.7% | +12.0% | −6.0% | −13.9% |
| net % | 4.9% | -6.8% | 13.1% | 16.9% | 10.6% | 11.8% | 10.9% | 8.9% |
| Free cash flow | 748.0 m | 778.0 m | 1.8 bn | 1.2 bn | 816.0 m | 656.0 m | 660.0 m | 865.0 m |
The series breaks before 2020: earlier years come from the original reports of the issuer of that time, later years from a subsequent filing that restated the perimeter (a separation, discontinued operations). The year-on-year change across the break is not shown.
Reported results vs expectations
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Balance sheet & financial health
Fiscal year 2026 · 31 Jan 2026
- Cash
- 953.0 m USD
- Financial debt
- 3.9 bn USD
- Net debt
- 2.9 bn USD
- Equity
- -1.3 bn USD
- Total assets
- 5.1 bn USD
- Debt / equity
- unavailable
- Current ratio
- 1.27x
- ROE
- unavailable
- ROA
- 13.1%
- FCF margin
- 11.9%
Financial statements (source on every figure)
Revenue and net income (USD)
Margins
Income statement · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Revenue | 6.4 bn | 7.9 bn | 7.6 bn | 7.4 bn | 7.3 bn | 7.3 bn | SEC (XBRL)· 12 Mar 2026verified |
| Cost of revenue | 3.3 bn | 4.0 bn | 4.3 bn | 4.2 bn | 4.1 bn | 4.1 bn | SEC (XBRL)· 12 Mar 2026verified |
| Gross profit | 3.1 bn | 3.9 bn | 3.3 bn | 3.2 bn | 3.2 bn | 3.2 bn | SEC (XBRL)· 12 Mar 2026verified |
| SG&A | 1.5 bn | 1.8 bn | 1.9 bn | 2.0 bn | 2.0 bn | 2.1 bn | SEC (XBRL)· 12 Mar 2026verified |
| Operating income | 1.6 bn | 2.0 bn | 1.4 bn | 1.3 bn | 1.3 bn | 1.1 bn | SEC (XBRL)· 12 Mar 2026verified |
| Depreciation & amortisation | 521.0 m | — | — | — | — | — | SEC (XBRL)· 19 Mar 2021verified |
| EBITDA | 2.1 bn ≈ | — | — | — | — | — | SEC (XBRL)· 18 Mar 2022derived |
| Interest expense | 432.0 m | 388.0 m | 348.0 m | 345.0 m | 312.0 m | 276.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Pre-tax income | 1.1 bn | 1.4 bn | 1.0 bn | 1.0 bn | 1.0 bn | 882.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Income tax | 257.0 m | 348.0 m | 251.0 m | 143.0 m | 230.0 m | 233.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Net income | 844.0 m | 1.3 bn | 800.0 m | 878.0 m | 798.0 m | 649.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Diluted EPS | 3.00 | 4.88 | 3.43 | 3.84 | 3.61 | 3.11 | SEC (XBRL)· 12 Mar 2026verified |
| Weighted average diluted shares | 281.0 m | 273.0 m | 233.0 m | 229.0 m | 221.0 m | 209.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Dividend per share | 0.30 | 0.45 | 0.80 | 0.80 | 0.80 | 0.80 | SEC (XBRL)· 12 Mar 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Operating income + Depreciation & amortisation.
Balance sheet · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Cash | 3.6 bn | 2.0 bn | 1.2 bn | 1.1 bn | 674.0 m | 953.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Receivables | 148.0 m | 240.0 m | 226.0 m | 224.0 m | 205.0 m | 180.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Inventories | 572.0 m | 709.0 m | 709.0 m | 710.0 m | 734.0 m | 699.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Current assets | 5.6 bn | 3.0 bn | 2.3 bn | 2.1 bn | 1.8 bn | 2.0 bn | SEC (XBRL)· 12 Mar 2026verified |
| Property, plant & equipment, net | 1.0 bn | 1.0 bn | 1.2 bn | 1.2 bn | 1.1 bn | 1.1 bn | SEC (XBRL)· 12 Mar 2026verified |
| Goodwill | 628.0 m | 628.0 m | 628.0 m | 628.0 m | 628.0 m | 628.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Total assets | 11.6 bn | 6.0 bn | 5.5 bn | 5.5 bn | 4.9 bn | 5.1 bn | SEC (XBRL)· 12 Mar 2026verified |
| Accounts payable | 345.0 m | 435.0 m | 455.0 m | 380.0 m | 338.0 m | 465.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Short-term debt | 0 | — | — | 0 | 0 | 280.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Long-term debt | 6.4 bn | 4.9 bn | 4.9 bn | 4.4 bn | 3.9 bn | 3.6 bn | SEC (XBRL)· 12 Mar 2026verified |
| Current liabilities | 2.8 bn | 1.3 bn | 1.4 bn | 1.3 bn | 1.2 bn | 1.6 bn | SEC (XBRL)· 12 Mar 2026verified |
| Equity | -661.0 m | -1.5 bn | -2.2 bn | -1.6 bn | -1.4 bn | -1.3 bn | SEC (XBRL)· 12 Mar 2026verified |
Cash flow · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Operating cash flow | 2.0 bn | 1.5 bn | 1.1 bn | 954.0 m | 886.0 m | 1.1 bn | SEC (XBRL)· 12 Mar 2026verified |
| Capex | 228.0 m | 270.0 m | 328.0 m | 298.0 m | 226.0 m | 237.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Free cash flow | 1.8 bn ≈ | 1.2 bn ≈ | 816.0 m ≈ | 656.0 m ≈ | 660.0 m ≈ | 865.0 m ≈ | SEC (XBRL)· 12 Mar 2026derived |
| Investing cash flow | -219.0 m | -259.0 m | -328.0 m | -286.0 m | -162.0 m | -227.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Financing cash flow | 610.0 m | -3.2 bn | -1.6 bn | -815.0 m | -1.1 bn | -599.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Dividends paid | 83.0 m | 120.0 m | 186.0 m | 182.0 m | 177.0 m | 167.0 m | SEC (XBRL)· 12 Mar 2026verified |
| Share repurchases | 0 | 2.0 bn | 1.3 bn | 148.0 m | 401.0 m | 401.0 m | SEC (XBRL)· 12 Mar 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Operating cash flow − Capex.
Computed indicators
Growth
Profitability
Returns
Balance sheet
Liquidity
Cash
Efficiency
Market and valuation
1 indicators that do not apply to the sector.
Valuation
olivLaw classification
Score: 61 / 100
A scoring methodology on indicators and valuation, not investment advice.
Closing price
04 Nov 2026Source: olivLaw, closing series
Market cap: 4.7 bn USD
Key indicators
Coverage and freshness
Score by group
- Valuation84
- Returns96
- Quality97
- Balance sheet41
- Growth0
Estimated value range
The combined range = the median of the valid methods' low, central and high values; it is not a probability interval and does not cover every result. Envelope of all methods: 23.77 – 155.24 USD.
Methods computed but outside the aggregate range: Dividend discount (DDM) (a small share of earnings is paid as dividends (capital returns through buybacks): the dividend model does not describe the value and stays outside the aggregate).
Valuation assumptions are editorial choices, not measured; beta is not measured.
Method ranges (USD per share)
— — Mid · ▏ Price
Valuation methods
- DCF (discounted cash flow)78.88 – 155.24 (Mid 105.34)WACC 7.4% · starting FCFF 1.2 bn USD · terminal value share of EV 79%The WACC × g sensitivity gives the method's bounds; these are not probabilities.Reverse DCF: no growth between −30% and +40% justifies the price
- Peers: EV/EBITDAunavailable · input data missing
- Peers: P/E23.77 – 109.78 (Mid 65.42)6 companies used · median multiple 17.1x · quartiles 6.2x – 28.6xJD, RENT, SBH, SGU, ULTA, WOOF
- Dividend discount (DDM)outside the aggregate10.51 – 14.14 (Mid 12.06)a small share of earnings is paid as dividends (capital returns through buybacks): the dividend model does not describe the value and stays outside the aggregate
Classification (SIC) comparables group by industry code, not by economic activity; the direct group is an editorial selection by activity. Members' multiples are on their own trailing twelve months, at their own latest close.
Assumptions (illustrative, editorial)
- Risk-free rate
- 4.3%
- Equity risk premium
- 5.0%
- Beta (default)
- 1.00
- Cost of equity
- 9.3%
- Terminal growth
- 2.5%
Factor scorecard
Neutral profile · Score 61/100
| Factor | Value | Score | Weight used |
|---|---|---|---|
| ROIC · Quality | unavailable | unavailable | — |
| Net margin · Quality | 10.8% | 94 (vs peers) | 9% |
| FCF conversion · Quality | 132.0% | 100 (on a fixed band) | 9% |
| Revenue CAGR 3Y · Growth | -1.2% | 0 (on a fixed band) | 12% |
| EPS CAGR 3Y · Growth | -3.2% | 0 (on a fixed band) | 12% |
| Net debt / EBITDA · Balance sheet | unavailable | unavailable | — |
| Interest coverage · Balance sheet | 4.5x | 46 (on a fixed band) | 9% |
| Current ratio · Balance sheet | 1.2x | 33 (on a fixed band) | 6% |
| P/E (TTM) · Valuation | 6.1x | 71 (vs peers) | 15% |
| EV/EBITDA · Valuation | unavailable | unavailable | — |
| FCF yield · Valuation | 21.7% | 100 (on a fixed band) | 12% |
| Shareholder yield (distributions) · Returns | 6.5% | 93 (on a fixed band) | 9% |
| Payout ratio (FCF) · Returns | 15.7% | 100 (on a fixed band) | 6% |
Factors without a value were dropped; the remaining weights were renormalised.
Score groups
- Balance sheet41/100 · 2/3 factors with a value
- Growth0/100 · 2/2 factors with a value
- Quality97/100 · 2/3 factors with a value
- Returns96/100 · 2/2 factors with a value
- Valuation84/100 · 2/3 factors with a value
Memo
BATH & BODY WORKS, INC. (BBWI). Latest full fiscal year: 2026; data up to 2026-08-01.
Figures computed from the financial statements: revenue 7.3 bn USD in 2026; YoY growth -0.2%; net margin 10.8%.
The estimated value range is 51.32–132.51 USD per share (median of 2 methods, agreement: high); assumptions are illustrative. Against the central value of 85.38 USD, the price of 23.54 USD leaves a potential of 262.7% (value / price − 1) and a margin of safety of 72.4% (1 − price / value). The range is the median of the methods' low, central and high values, not a probability interval.
olivLaw score 61/100, methodological classification: neutral profile (score, margin of safety and method agreement together; not a judgement of the right price). Not investment advice.
Text generated deterministically from the figures shown; no language model. Not investment advice.
What supports the thesis
- Net margin: 10.8%
- FCF conversion: 132.0%
- P/E (TTM): 6.1x
- FCF yield: 21.7%
- Shareholder yield (distributions): 6.5%
- Payout ratio (FCF): 15.7%
- The price is below the estimated value range
What contradicts it
- Revenue CAGR 3Y: -1.2%
- EPS CAGR 3Y: -3.2%
Not assessed (insufficient data or a ratio without meaning): ROIC, Net debt / EBITDA, EV/EBITDA.
Versus the vertical median
Retail-Retail Stores, NEC (SIC 5990) · same industry (4-digit SIC) · compared with 18 companies
Multiples and returns vs the median
Price rebased to 100 (monthly, 5 years)
Companies in the vertical
| Market cap | P/E | ROE | Net margin | Revenue YoY | 1A / 3A | |
|---|---|---|---|---|---|---|
| ULTAUlta Beauty, Inc. | 28.2 bn | 24.1 | 46.1% | 9.3% | +9.7% | +23% / +55% |
| BBWIBath & Body Works, Inc. | 4.7 bn | 6.1 | — | 10.8% | −0.2% | −0% / −28% |
| SBHSally Beauty Holdings, Inc. | 1.8 bn | 10.0 | 23.5% | 5.2% | −0.4% | +21% / +99% |
| YJYunji Inc. | 1.3 bn | — | -13.5% | -42.0% | −20.8% | −27% / −62% |
| TITNTitan Machinery Inc. | 530.0 m | — | -9.7% | -2.5% | −10.2% | +22% / −1% |
| SGUStar Group, L.P. | 429.8 m | 4.9 | — | 4.6% | +1.0% | +9% / +2% |
| NAASNaaS Technology Inc. | 223.8 m | — | — | -454.5% | −38.9% | −44% / −100% |
| NEGGNewegg Commerce, Inc. | 207.4 m | — | -3.7% | -0.3% | +16.9% | −87% / −61% |
| RENTRent the Runway, Inc. | 83.1 m | 0.2 | — | 11.8% | +7.7% | −49% / −77% |
| BARKBark, Inc. | 75.2 m | — | -36.7% | -8.4% | −18.5% | −42% / −49% |
| TKLFTokyo Lifestyle Co., Ltd. | 58.0 m | 68.5 | 1.7% | 0.2% | +77.6% | −48% / −82% |
| BQBoqii Holding Limited | 10.5 m | — | -2.8% | -1.2% | −5.7% | −79% / −98% |
| INHDInno Holdings Inc. | 8.7 m | — | -7.2% | -72.7% | +221.4% | −97% / unavailable |
| RCTRedCloud Holdings plc | 2.3 m | — | — | -95.3% | +4.3% | −98% / unavailable |
| LESLLeslie’s, Inc. | 955.3 k | — | — | -21.2% | −6.6% | unavailable / unavailable |
| HITIHigh Tide Inc. | — | — | -44.0% | -8.5% | +13.7% | +8% / +85% |
| JDJD.com, Inc. | — | 30.1 | 10.2% | 1.8% | +17.9% | −7% / +1% |
| FLWS1 800 Flowers Com Inc | — | — | -65.4% | -9.0% | −10.8% | −17% / −68% |
| WOOFPetco Health & Wellness Company, Inc. | — | 31.1 | 2.6% | 0.5% | −2.5% | −2% / +4% |
1- and 3-year price returns: for BBWI from daily closes (the same as the performance table), for the other companies from month-end closes.
olivLaw engine forecast
The world engine ran after the company's latest material disclosure. Probabilities are of TOUCHING a level within the horizon (not closing there) and sit next to the random walk (p_rw), the no-information benchmark.
The engine has no published run for this company yet.
Valuation scenarios (editable assumptions)
Illustrative scenarios
Illustrative: not forecasts and without probabilities. Each case is one coherent set of assumptions, computed on today's figures.
Estimated price (USD)
| Estimated price | Bear | Base | Bull |
|---|---|---|---|
| 1 years | 13.25 Total return -41% · Per year -41% | 23.49 Total return 3% · Per year 3% | 35.47 Total return 55% · Per year 55% |
| 3 years | 11.43 Total return -44% · Per year -18% | 22.93 Total return 7% · Per year 2% | 38.22 Total return 75% · Per year 21% |
| 5 years | 9.85 Total return -47% · Per year -12% | 22.38 Total return 12% · Per year 2% | 41.18 Total return 97% · Per year 15% |
- Exit P/E± 5.73
- Net margin± 4.01
- Annual revenue growth± 3.48
- Annual dilution± 0.34
AI analysis
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
In brief
Bath & Body Works is a global leader in body care and home fragrance, with a large fleet of company-operated stores in North America and a loyalty program with active members. The company is in a multi-year transformation called the Consumer First Formula, while sales are slipping and margins are under pressure from tariffs and costs, with fiscal 2025 total net sales of 7291 million dollars.
SWOT
Strengths
- The brand is globally recognized, and the store network and a loyalty program with millions of active members give it a solid customer base.
- A fast, vertically integrated supply chain allows quick responses to shifts in demand.
- The company generated cash and beat its guidance in the second quarter of 2026, which gives it financial flexibility.
Weaknesses
- Sales declined in fiscal 2025 and in the first half of 2026, and the company has acknowledged that it underperformed its sector.
- Margins were hit by promotions and tariffs, and general and administrative costs rose in fiscal 2025.
- Dependence on store traffic and on holiday seasonality makes results vulnerable to demand drops in critical periods.
Opportunities
- If the Consumer First Formula shows results, the company could win back younger shoppers and return to growth.
- Expansion on Amazon and third-party platforms could bring new customers, and international partnerships could support growth without large investment.
- Planned cost savings could be reinvested in innovation and marketing, which could improve medium-term performance.
Threats
- Cautious, value-driven consumer spending could keep pressure on sales and promotions.
- Tariffs and volatile transport and energy costs could again reduce margins.
- Strong competition in fragrance and body care could limit the company's ability to regain market share.
Risks
- Lower store trafficmedium
The company depends on store traffic and on suitable locations, and closing mall stores could reduce sales if demand does not shift to other channels.
- Tariffs and sourcing costshigh
Trade policy and tariffs can quickly change purchase costs, and margins could fall if these costs cannot be passed on to customers.
- Labor costsmedium
Higher wages and healthcare costs have increased operating expenses, and this pressure could continue if the labor market stays competitive.
- Seasonality and inventorymedium
The fourth quarter concentrates a large part of profit, and inventory bought in advance may have to be sold at reduced prices if holiday demand is weaker than expected.
Investment thesis
What would need to be true (bull case)
- Second quarter 2026 results beat guidance, and direct sales grew for the first time in several years, suggesting that parts of the strategy are beginning to work.
- The company has a recognized global brand, a loyalty program with millions of active members and a fast supply chain, assets that could support a recovery.
- Full-year 2026 earnings guidance was raised, and planned cost savings could fund investment in products and marketing.
What would break the thesis
- Sales fell in fiscal 2025 and again in the second quarter of 2026, and annual guidance points to a further decline, which could mean a slower recovery than hoped.
- Recent gains include tariff refunds and a settlement gain that may not recur, so underlying results could be weaker than the reported figures.
- The transformation is at an early stage, and the investment it requires could squeeze margins while consumers remain cautious, which could prolong the difficult period.
What to watch
- Trend in store and direct channel sales after the first half of 2026Q3 2026
- Delivery against full-year guidance for net sales and adjusted earnings per share2026
- Gross margin trend once the effect of tariff refunds is excludedQ3 2026
- Results of the first full periods of the transformation and growth in active loyalty members2027
Products, market & competition
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
The business
The loyalty program has 40 million active members, and the company says its brand image and global store footprint are competitive advantages that could support a return to growth. The current strategy, the Consumer First Formula launched in the third quarter of 2025, targets innovative products, renewed brand investment, wider access through digital and third-party channels, and a faster, leaner organization.
Segments
Direct e-commerce
Direct sales through the company's own websites and digital channels in the United States and Canada declined in fiscal 2025, but in the second quarter of 2026 they grew for the first time in a long stretch, which management links to improvements in the digital experience. The company also began selling on Amazon in the United States in February 2026.
International and franchise
International sales, which include royalties from franchised stores and wholesale sales, grew in fiscal 2025 and kept rising strongly in the second quarter of 2026. The asset-light model with local partners allows expansion without large direct real estate investment.
Market context
The company describes body care and home fragrance as a highly competitive business with many specialty chains, department stores, online retailers and discount retailers. It says it operates in attractive, growing categories, but it underperformed its sector in 2025 and reported a 2.3% decline in second quarter 2026 net sales.
Consumers remain focused on value, and management expects a macroeconomic environment similar to 2025 with cautious spending. Tensions in the Middle East have increased volatility in energy prices and transport costs, which could affect demand and costs in some markets.
Trends
- Value-oriented consumer spendingheadwind
Consumers have kept spending cautiously, and management says this could persist. More frequent promotions have weighed on margins but also serve as a way to attract customers.
- Shift to digital channels and off-mall storesmixed
Customers increasingly choose to buy online and pick up in store, and the company is moving its fleet toward off-mall locations. These changes could reduce traffic in older stores but may open access to new customers.
- Tariffs and margin pressureheadwind
Tariffs reduced gross margin in fiscal 2025, and tariff refunds received in 2026 temporarily helped results. If the trade environment changes, sourcing costs could rise again.
- Product innovation and winning back younger shopperstailwind
The company says new products and brand investment are starting to attract younger consumers, and body care has partly recovered. The effect is still early and its durability has not yet been shown.
Competitive position
The company competes with specialty chains in fragrance and body care, with department stores, online retailers and discount retailers. According to its annual report, the main competitive factors are brand image, presentation, marketing, design, price, service, fulfillment, assortment and quality.
Its competitive position depends on renewing its products and winning back younger shoppers in a sector where management admits it underperformed. If these efforts succeed, its position could strengthen, but results are still uncertain.
- Specialty fragrance and body care chains
Specialty retailers in this segment are referred to in the filing without names, and direct competition depends on location and category.
- Department stores
Department store beauty areas sell body care and fragrance, making them indirect competitors for the same consumer spending.
- Online retailers
E-commerce is an important competitive channel, and the company is itself expanding its presence on third-party platforms.
- Discount retailers
Discount retailers offer lower-priced alternatives, which can influence the company's promotions and margins.
Links, dependencies and risks
Who the company is tied to, from its own SEC filings (customers, suppliers, production, partners, competitors, countries, regulation), from the 5 %+ holders' statements (13D/13G) and from what other companies say about it. Click a node for its evidence; on a listed company the graph moves to it.
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News & filings
In the press
- Barington Takes New Stake in Bath & Body Works, Pushing for SaleBloomberg Markets · 10 Sept 2026 · EN
- Bath & Body Works (BBWI) Returned to Digital Growth but Still Expects Sales to Decline. Can E-Commerce Fix Weak Store Traffic?Yahoo Finance — News · 29 Aug 2026 · EN
- Bath & Body Works, Inc. Q2 2027 Earnings Call SummaryYahoo Finance — News · 26 Aug 2026 · EN
- Bath & Body Works Topped Wall Street Sales Estimates in Q2, but Is Still Not Getting Enough Consumers Through Its DoorsYahoo Finance — News · 26 Aug 2026 · EN
- Bath & Body Works Q2 Earnings Call HighlightsYahoo Finance — News · 26 Aug 2026 · EN
- Bath & Body Works lifts full-year earnings outlook after Q2 profit beats forecastsYahoo Finance — News · 26 Aug 2026 · EN
- Bath & Body Works Surges on Stock Recommendation; Klarna Drops on Guidance | Stock MoversBloomberg Markets · 18 Aug 2026 · EN
The latest news item in our archive is from 10 Sept 2026; the newest SEC filing is from 23 Sept 2026. The press archive comes from the RSS feeds we follow and does not necessarily cover the latest event — the filings alongside do.
SEC filings
- Current report23 Sept 2026Departure or appointment of officers · Financial statements and exhibits
- Quarterly report26 Aug 2026
- Current report26 Aug 2026Results of operations · Regulation FD disclosure · Financial statements and exhibits
- Current report20 Jul 2026Regulation FD disclosure · Financial statements and exhibits
- Current report15 Jun 2026Shareholder vote
- Quarterly report27 May 2026
- Current report27 May 2026Results of operations · Departure or appointment of officers · Regulation FD disclosure · Financial statements and exhibits
- Proxy statement28 Apr 2026
- Annual report12 Mar 2026
- Current report04 Mar 2026Results of operations · Regulation FD disclosure · Financial statements and exhibits
Sources
- [1] Form 10-K, fiscal year ended 2026-01-31 · SEC / Bath & Body Works, Inc. · 12 Mar 2026
- [2] Form 10-Q, quarter ended 2026-08-01 · SEC / Bath & Body Works, Inc. · 26 Aug 2026
- [3] Form 8-K, results release (exhibit 99.1) · SEC / Bath & Body Works, Inc. · 26 Aug 2026
Figures computed by olivLaw from SEC filings and closing prices; the qualitative analysis is AI-generated from cited sources. Not investment advice.