5. Bath & Body Works Inc. (NYSE:BBWI)
Forward Price-to-Earnings Ratio: 7.99
Average Upside Potential: 38.65%
Number of Hedge Fund Holders: 55
Bath & Body Works Inc. (NYSE:BBWI) is an American specialty retail company that specializes in selling personal care products, including soaps, body lotions, fragrances, and candles, known for its wide variety of scents and seasonal collections. It has a strong presence in shopping malls and often offers promotions and discounts to attract customers.
The company is actively pursuing growth strategies. It’s focusing on strengthening its core portfolio, exploring new market opportunities, adapting to changing market dynamics, improving profitability, and reducing costs. Despite such strides, there was a 2.12% decline in FQ2 2025 revenue, as compared to the year-ago period. Performance was impacted by the semiannual sales mostly, which fell short of expectations. Without this impact, revenue would’ve only been down 1%. Its loyalty program has 37 million+ active members accounting for 80% of US sales.
It’s focusing on growth in adjacent categories like men’s, hair, lip, and laundry, targeting both existing and new customers. The company is launching new products and campaigns in the second half of the year to increase awareness. Its real estate portfolio is strong, with ~55% of North American stores now in off-mall locations. International system-wide retail sales grew double digits in the second quarter in unaffected areas.
Bath & Body Works Inc. (NYSE:BBWI) is enhancing its mobile app with new features like app for all, frictionless ordering, and geotargeting, and is launching a TikTok shop to attract younger customers and introducing a GenAI fragrance finder, Gingham Genius, to provide a personalized fragrance-finding experience.
The company is focused on growth, investing in customer engagement, expansion, operational efficiency, product innovation, and omnichannel experiences. It’s making progress in these areas, leveraging its competitive advantages, such as a diverse product range and strong brand loyalty. These factors together position Bath & Body Works Inc. (NYSE:BBWI) for long-term success.
Third Point made the following comment about Bath & Body Works, Inc. (NYSE:BBWI) in its Q4 2022 investor letter:
“We initiated a position in Bath & Body Works, Inc. (NYSE:BBWI) earlier in the year that we added to significantly in the Fourth Quarter. The company, which sells personal care and home fragrance products, separated from Victoria’s Secret in late 2021 and has struggled to find its footing in the public markets. Bath & Body Works was challenged by the normalization of trends following the pandemic, but also suffered from execution hiccups that made matters worse. On the operations front, the company spent much of 2022 without a permanent CEO, cut guidance multiple times given inventory and cost pressures, and did a poor job communicating meaningful increases in the company’s cost structure as a standalone business. On the capital allocation front, the execution of an accelerated share repurchase program was sloppy at best.
Despite these recent struggles, we believe BBWI can change its equity story, improve its earnings power, and earn a more premium valuation. The recent appointment of a new CEO, Gina Boswell from Unilever, is an encouraging first step…” (Click here to read the full text)
