TD Cowen on Bath & Body Works Inc. (BBWI): 'All Eyes on 2H as Innovation & Digital Improvements'

TD Cowen analyst Jonna Kim reiterated a Buy rating and $38.00 price target on Bath & Body Works Inc. (NYSE: BBWI).

The analyst commented: "All Eyes on 2H as Innovation & Digital Improvements Take Hold; While at the mid-point, management raised guidance (10bps higher on sales growth and ~1% higher on EPS), a combination of higher tariff impact ($85mm), higher SG&A deleverage, and softer than expected 2Q25 sales growth could be key factors weighing on the stock. As we previously noted, despite the noise, we do think BBWI is a 2H story with more innovation planned and improvements underway.

The quarter was mixed with sequentially weaker traffic and a -LSD% decline in body care limiting upside and the tariff impact of $85mm was greater than expected given BBWI manufactures ~80% in the US. We do note, without tariffs, gross margins would have been up ~+100bps y/y in FY25 and FY25 EPS could have been higher by ~7% vs. the mid-point of the current guide. Further, we estimate ~$30mm of the tariff impact may not be repeated next year. For the underlying business, we acknowledge key areas that need enhancements include digital, connecting with younger consumers, and simplifying the in-store experience. We expect the new digital app, Disney partnership, expansion into college stores, as well as enhanced marketing efforts should drive improvements in the back half. We maintain our Buy rating with PT unchanged."

For an analyst ratings summary and ratings history on Bath & Body Works Inc. click here. For more ratings news on Bath & Body Works Inc. click here.

Shares of Bath & Body Works Inc. closed at $29.36 yesterday.

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