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Summary
- Bath & Body Works is set to report first-quarter earnings for Fiscal 2025 on June 4. I am expecting a weak earnings report but a muted impact on the stock.
- Bath & Body’s prospects are closely tied to the demand environment for the domestic beauty industry. Cracks are appearing in this market.
- The one factor that has contributed the most to Bath & Body’s competitive advantages in recent years is constant innovation. The company does not plan to stop.
- At a forward P/E of 15.72, BBWI stock is trading in line with the consumer discretionary sector average of 16.33. But the long-term picture holds promise for a meaningful expansion in multiples.
The last time I looked at Bath & Body Works (NYSE:BBWI) was when Daniel Loeb sent a letter to the company’s Board of Directors highlighting issues he has identified in several areas, including corporate governance, capital allocation, and executive pay. This was just over a year ago, and at the time, I thought the company was well-positioned for long-term growth despite facing short-term challenges including inflationary pressures. Since then, BBWI stock has gained almost 50%. On the back of this stellar performance and the mounting macroeconomic pressures, Bath & Body seems fairly valued going into first-quarter earnings.
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