Bath & Body Works slides as Goldman downgrades stock on weak sentiment

Investing.com -- Goldman Sachs downgraded Bath & Body Works to Sell from Neutral and trimmed its price target to $19 from $23, citing weakening brand sentiment and risks tied to the retailer’s newly expanded third-party distribution.

Analysts led by Kate McShane said that while Bath & Body Works is "in the midst of an investment year focusing on the core business and finding new avenues for growth," consumer sentiment is trending below historical norms.

Shares of the Columbus, Ohio-based retail company fell 4.2% in premarket trading by 07:28 ET.

Goldman analyzed Reddit conversation trends and found current sentiment running around 9%, well below the company’s historical average of roughly 17%. Reddit conversation volume has also dropped sharply year-to-date, with sentiment softening around topics such as Halloween, the semi-annual sale, and certain products like creams.

“Additionally, we noted persistent frustrations around the shopping experience, especially BOPIS,” the analysts added.

Separately, data from consumer insights firm HundredX showed Net Promoter Scores remain below average for younger shoppers, particularly the 18-29 age cohort, even as overall NPS has improved sequentially from a trough in May 2025.

The downgrade also reflects concerns around Bath & Body Works’ first-ever push into third-party retail channels, including Amazon and Ulta Beauty. Goldman said it sees a "cannibalization risk" from Amazon’s faster shipping options and smaller product assortment, which could reduce in-store discovery and impulse purchases.

Bath & Body Works expects $50 million in incremental fiscal 2026 (FY26) growth from expanded distribution, but estimated that if 30% of that is cannibalized, it could translate to $15 million in lost retail sales for the year.

The bank also flagged risk from the company’s July 12 launch at more than 600 Ulta Beauty stores and on Ulta.com, pointing to "high competitive density in body care categories" as a further challenge.

The Wall Street firm trimmed its EPS estimates across FY26-FY28, now sitting roughly 4-5% below consensus, with FY26 EPS seen at $2.53 versus $2.65 consensus. It also lowered its FY26 net sales growth forecast to -3.6% from -3.3% and cut its EBIT margin estimate to 13.1% from 13.4%, citing "ongoing competitive challenges."

Analysts said they could turn more constructive if the company’s new strategy delivers financial benefits faster than expected, if consumer sentiment improves, or if planned marketing and innovation campaigns in the second half of the year help reaccelerate sales.

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