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

Number of Hedge Fund Investors: 55                                    

Bath & Body Works, Inc. (NYSE:BBWI) has established a strong competitive advantage in the large addressable markets it serves. The company’s strong intangible asset, its strong brand, is reinforced by its recent leadership in the candle air freshener and bath and shower industries, which has been strengthened by BBW’s prompt responsiveness to market trends.

Operating under the trademarks C.O. Bigelow, White Barn, and Bath & Body Works, Bath & Body Works is a specialized home fragrance and fragrant body care retailer. In fiscal 2023, just 5% of the company’s sales came from outside of North America. The majority of its revenue is generated in the Americas. Similar to 2022, 74% of revenues for the fiscal year 2023 came from the brick-and-mortar network, which consisted of over 1,800 retail locations. This was due to usual customer buying habits.

Future expansion is anticipated by analysts from online and international channels, retail reformatting, and adjacent category expansions such as laundry and hair products, which have all had encouraging outcomes, especially in terms of drawing in new clients.

The company’s loyalty program encourages repeat purchases and business loyalty by paying up to 16.5% on products. There were 37 million participants in the loyalty program as of 2023. Furthermore, according to the company, loyalty members accounted for close to 80% of revenues in 2023.

BBWI reported Q2 2024 results that were $1.56 billion higher than expected by the analysts.

Over time, the firm plans to modify its leases. As per Morningstar analysts, profits may increase as a result of additional off-mall locations, favorable modified rent arrangements, and productivity benefits from the changeover of the White Barn concept.

In summary, Bath & Body Works, Inc. (NYSE:BBWI)’s expanding consumer base and successful loyalty program will probably contribute to its long-term financial success.