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Bath & Body Works (BBWI)
NYSE:BBWI
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Bath & Body Works
(NYSE:BBWI)61Neutral
Positive Factors
Customer Loyalty
Active Loyalty Members increased by 6% year over year, showing growth in customer loyalty.
Free Cash Flow
A healthy $750-$850mn of free cash flow is expected.
Negative Factors
Revenue Decline
There are questions surrounding the level of revenue decline the company would face as it laps its incredible pandemic strength.
Bath & Body Works (BBWI) vs. S&P 500 (SPY)
Market Cap
$7.42B
Dividend Yield2.26%
Average Volume (3M)4.02M
Price to Earnings (P/E)9.5
Beta (1Y)0.96
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees57,157
SectorConsumer Cyclical
Sector Strength53
IndustryRetail - Discretionary
Share Statistics
EPS (TTM)3.86
Shares Outstanding216,582,090
10 Day Avg. Volume5,995,147
30 Day Avg. Volume4,023,945
Financial Highlights & Ratios
PEG Ratio0.33
Price to Book (P/B)N/A
Price to Sales (P/S)1.03
Price to Cash Flow (P/CF)-19.30
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$45.93Price Target Upside34.10% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering16
Bath & Body Works Business Overview & Revenue Model
Company DescriptionBath & Body Works is a personal care and home fragrance company, selling fine fragrance mists, body lotions and creams, 3-wick candles, home fragrance diffusers and liquid hand soaps. The company's supply chain is predominantly U.S.-based. Bath & Body Works has more than 1,870 Company-operated Bath & Body Works locations in the U.S. and Canada, more than 490 international franchised locations, and an online storefront.
How the Company Makes MoneyBath & Body Works makes money primarily through the sale of its personal care and home fragrance products. The company operates a robust retail network, which includes both physical stores and an online platform that caters to a wide customer base. Revenue is generated from direct sales at these locations, as well as through seasonal promotions and limited-time offerings that drive customer engagement and boost sales. The company also benefits from strategic partnerships and collaborations that expand its product offerings and market reach. Additionally, Bath & Body Works leverages data-driven marketing strategies to optimize its product mix and enhance customer loyalty, which contributes to sustained revenue growth.
Bath & Body Works Financial Statement Overview
Summary
Bath & Body Works shows solid profitability and operational efficiency in its income statement, despite stagnant revenue growth. The balance sheet reveals financial instability due to negative equity and high leverage, posing significant risks. Nonetheless, strong cash flow from operations and effective cash management provide a cushion for the company.Income Statement
The company's revenue has stabilized after a drop from 2022 to 2023. TTM gross profit margin stands at 43.97%, indicating healthy profitability. However, net profit margin is 12.43%, reflecting solid but not exceptional net profitability. The EBIT margin of 17.26% and EBITDA margin of 21.10% point to good operational efficiency. Overall, revenue growth has been stagnant, which is a concern in a competitive retail landscape.65
Positive
Balance Sheet
The company has a negative stockholders' equity, indicating financial instability. The debt-to-equity ratio is not calculable due to negative equity, yet high debt levels are concerning. Return on equity is not applicable due to negative equity. The equity ratio is also negative, highlighting potential risks. The overall balance sheet suggests a highly leveraged position with significant financial risk.40
Negative
Cash Flow
Operating cash flow is strong at $857 million TTM, with a solid free cash flow of $643 million. The operating cash flow to net income ratio of 0.93 suggests efficient cash generation from profits. Free cash flow to net income ratio is 0.70, indicating reasonable cash conversion. Despite high leverage, cash flow metrics show resilience and effective cash management.75
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 7.43B | 7.43B | 7.56B | 7.88B | 6.43B | 5.41B | Gross Profit |
| 3.27B | 3.24B | 3.25B | 3.85B | 3.10B | 2.39B | EBIT |
| 1.28B | 1.28B | 1.38B | 2.01B | 1.60B | 1.04B | EBITDA |
| 1.57B | 1.55B | 1.61B | 2.17B | 2.08B | 2.64B | Net Income Common Stockholders |
| 924.00M | 878.00M | 800.00M | 1.33B | 844.00M | -366.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.08B | 1.08B | 1.23B | 1.98B | 3.90B | 1.50B | Total Assets |
| 5.46B | 5.46B | 5.49B | 6.03B | 11.57B | 10.13B | Total Debt |
| 5.57B | 5.57B | 6.05B | 6.01B | 9.46B | 9.08B | Net Debt |
| 4.49B | 4.49B | 4.82B | 4.03B | 5.55B | 7.58B | Total Liabilities |
| 7.09B | 7.09B | 7.70B | 7.54B | 12.23B | 11.62B | Stockholders Equity |
| -1.63B | -1.63B | -2.21B | -1.52B | -662.00M | -1.50B |
| Cash Flow | Free Cash Flow | ||||
| 643.00M | 656.00M | 816.00M | 1.22B | 1.81B | 778.00M | Operating Cash Flow |
| 857.00M | 954.00M | 1.14B | 1.49B | 2.04B | 1.24B | Investing Cash Flow |
| -161.00M | -286.00M | -328.00M | -259.00M | -219.00M | -480.00M | Financing Cash Flow |
| -916.00M | -815.00M | -1.56B | -3.19B | 610.00M | -666.00M |
Bath & Body Works Technical Analysis
Negative
34.25
Price Trends
37.51
Negative
35.02
Negative
35.67
Negative
Market Momentum
-0.21
Positive
37.97
Neutral
11.49
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BBWI, the sentiment is Negative. The current price of 34.25 is below the 20-day moving average (MA) of 37.54, below the 50-day MA of 37.51, and below the 200-day MA of 35.67, indicating a bearish trend. The MACD of -0.21 indicates Positive momentum. The RSI at 37.97 is Neutral, neither overbought nor oversold. The STOCH value of 11.49 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $4.99B | 14.97 | 7.53% | 0.16% | ― | ― | |
76 Outperform | $16.18B | 13.74 | 51.62% | ― | 4.44% | 1.31% | |
74 Outperform | $73.90B | 25.95 | 1362.74% | 2.15% | 3.30% | 26.83% | |
61 Neutral | $7.42B | 9.49 | -52.83% | 2.26% | ― | ― | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
57 Neutral | $4.81B | 40.12 | 0.27% | ― | 1.35% | -99.94% | |
50 Neutral | $24.49B | 147.29 | -16.79% | 2.88% | 0.07% | -249.21% |
* Consumer Cyclical Sector Average
Performance Comparison
BBWI
Bath & Body Works
34.25
-9.57
-21.84%
CL
Colgate-Palmolive
91.06
5.74
6.73%
EL
The Estée Lauder Companies
68.09
-74.11
-52.12%
ULTA
Ulta Beauty
343.45
-204.85
-37.36%
COTY
Coty
5.52
-7.23
-56.71%
LB
LandBridge Company LLC Class A
65.23
42.30
184.47%
Bath & Body Works Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -16.63% | Next Earnings Date: May 15, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong growth in loyalty membership, cost savings, and Q4 financial performance, with successful product launches and international expansion. However, challenges included a decline in overall net sales and direct net sales, as well as issues in international markets and a slight decline in the home fragrance category.Highlights
Record High Loyalty Membership Growth
Active loyalty membership grew by 6% year-over-year, with approximately 80% of sales flowing through the program. The loyalty program continues to significantly outperform non-loyalty customers, leading to increased spend, trips, cross-channel purchases, and higher customer retention.
Successful Cost Savings Initiatives
The Fuel for Growth program delivered approximately $155 million of incremental cost savings in 2024, bringing the two-year total to over $300 million, significantly exceeding initial targets.
Strong Q4 Financial Performance
Net sales in Q4 were $2.8 billion, above the high end of guidance, and earnings per diluted share were $2.09, also beating the high end of the guidance range.
Expansion of Everyday Luxuries Line
Everyday Luxuries, a prestige-inspired line of fine fragrance mists, resonated with younger customers and attracted a new, younger, and more diverse customer base.
Improved Customer Experience
57% of North American stores are now in off-mall locations. Marketing and technology efforts contributed to record-high customer retention rates and an improvement in attracting new-to-brand customers.
International Expansion
System-wide retail sales were up nearly 10% in international markets, driven by 20% growth in areas not affected by the war in the Middle East.
Lowlights
Q4 Net Sales Decline
Net sales decreased 4% compared to the prior year, impacted by calendar shifts, the 53rd week last year, and five fewer shopping days between Thanksgiving and Christmas.
Decline in Direct Net Sales
Direct net sales were $595 million, a decrease of 9% compared to last year. However, BOPIS demand increased by 45% in the quarter.
Challenges in International Sales
International net sales were $84 million, down 10% from the prior year. Adjusted for the extra week, net sales were down mid-single digits.
Slight Decline in Home Fragrance Category
Home fragrance performance in Q4 was down slightly versus the prior year due to the timing of promotional strategies, with some demand shifted from Q4 into Q3.
Company Guidance
In the Bath & Body Works fourth quarter 2024 earnings call, the company provided detailed guidance for fiscal year 2025, highlighting several key metrics. They expect net sales growth to range between 1% and 3% year-over-year, with a focus on product innovation, marketing, and technology to drive this growth. The company aims to maintain operational excellence through cost management, having already achieved $155 million in cost savings in 2024, contributing to a two-year total of over $300 million. Earnings per diluted share for 2025 are projected to be between $3.25 and $3.60. The company also reported a growth in active loyalty membership by 6% year-over-year, with approximately 80% of sales flowing through the program. They plan to continue expanding their reach through category adjacencies and international markets, expecting international net sales to return to growth. For the first quarter, Bath & Body Works forecasts net sales growth of 1% to 3% and earnings per diluted share between $0.36 and $0.43.Bath & Body Works Corporate Events
Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Bath & Body Works Announces Strong Q4 2024 Results
Positive
Feb 27, 2025
On February 27, 2025, Bath & Body Works reported its financial results for the fourth quarter and full-year 2024, showing net sales of $2.8 billion and earnings per diluted share of $2.09 for the fourth quarter, both exceeding guidance. The company also announced a new $500 million share repurchase program and provided 2025 guidance with expected net sales growth of 1% to 3% and earnings per diluted share between $3.25 and $3.60. Despite a decrease in net sales compared to the previous year due to a shifted fiscal calendar, the company demonstrated strong performance driven by product innovation and strategic initiatives.
Executive/Board Changes
Bath & Body Works Announces CHRO Transition Plan
Neutral
Feb 3, 2025
Effective January 31, 2025, Deon Riley stepped down as Chief Human Resources Officer of Bath & Body Works, Inc. The company will conduct a search for her successor while Ms. Riley transitions to a non-executive role to aid in the handover until her expected separation on March 2, 2025. Post-separation, she will be entitled to severance benefits as per the agreement, and remain bound by certain non-compete and non-solicitation clauses.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.