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Bath & Body Works Inc BBWI

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Stock XNYS Rating as of
$31.06 +0.73 (2.41%)
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Company Report

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Bath & Body Works Continues to Surface Product Offerings That Drive Consumer Demand

Jaime M Katz

We believe Bath & Body Works has carved out a solid competitive edge in the sizable addressable markets in which it operates. The company’s strong brand intangible asset is supported by its leadership position across the bath and shower and candle air freshener industries in recent years, which has been bolstered by BBW’s quick response to consumer trends. Quantitatively, the narrow moat is reinforced by a 58% average return on invested capital excluding goodwill that we expect the business to generate over the next decade, well ahead of our 8% weighted average cost of capital estimate.

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Price vs Fair Value

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BBWI is trading at a 61% discount.
Price
$30.33
Fair Value
$68.00
Uncertainty
Very High
1-Star Price
$889.40
5-Star Price
$11.00
Economic Moat
Wdryzf
Capital Allocation
Nnntggw

Bulls Say, Bears Say

Bulls

BBW is set to renegotiate numerous leases over the next few years. Favorably updated rent agreements along with productivity gains from the White Barn format conversion could help boost profits.

Bears

A secular shift in demand around mall retailing could slow footfall, tempering demand. Mall locations still represented about half of the fleet at year-end 2022 (versus 61% in 2016).

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Trading Information

Previous Close Price
$30.33
Day Range
$30.10–31.06
52-Week Range
$27.32–48.56
Bid/Ask
$31.04 / $31.05
Market Cap
$7.06 Bil
Volume/Avg
493,834 / 3.4 Mil

Key Statistics

Price/Earnings (Normalized)
10.14
Price/Sales
0.94
Dividend Yield
2.64%
Dividend Yield (Forward)
2.64%
Total Yield
4.07%

Company Profile

Bath & Body Works is a specialty home fragrance and fragrant body care retailer operating under the Bath & Body Works, C.O. Bigelow, and White Barn brands. The company generates most of its business in North America, with less than 5% of sales from international markets in fiscal 2022. For fiscal 2022, 72% of sales stemmed from the brick-and-mortar network (which was composed of more than 1,800 retail stores), similar to 2021 levels, as consumer shopping patterns remained to normal. Future growth is expected from store reformatting, digital and international channels, as well as adjacent category expansion.
Sector
Consumer Cyclical
Industry
Specialty Retail
Stock Style Box
Small Value
Total Number of Employees
57,200
Website
https://www.bbwinc.com

Competitors

Valuation

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Metric
BBWI
WSM
EL
Price/Earnings (Normalized)
 10.1412.1155.97
Price/Book Value
 —6.498.22
Price/Sales
 0.941.522.86
Price/Cash Flow
 6.797.9027.09
Price/Earnings
BBWI
WSM
EL

Financial Strength

Metric
BBWI
WSM
EL
Quick Ratio
 0.780.380.85
Current Ratio
 1.561.221.45
Interest Coverage
 3.69—3.15
Quick Ratio
BBWI
WSM
EL

Profitability

Metric
BBWI
WSM
EL
Return on Assets (Normalized)
 13.17%23.25%4.32%
Return on Equity (Normalized)
 —70.31%16.75%
Return on Invested Capital (Normalized)
 25.92%36.05%6.79%
Return on Assets
BBWI
WSM
EL

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WSM
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RH
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