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Bath & Body Works Slashes Guidance, But Wall Street Sees Method in the Madness

MarketDash Editorial Team
16 days ago
BofA Securities keeps its Buy rating on Bath & Body Works despite a guidance cut that rattled investors, pointing to the retailer's strategic transformation plan and a potential Amazon storefront launching in 2026.

When Bath & Body Works Inc. (BBWI) lowered its guidance, the magnitude of the reset caught investors off guard. Shares took a hit, dropping 3.82% to $15.21—dangerously close to the 52-week low of $15.42. But here's the thing: at least one Wall Street analyst thinks the candle retailer is actually making the right moves.

The Analyst's Take

BofA Securities analyst Lorraine Hutchinson kept her Buy rating on Bath & Body Works, though she did trim her price target from $32 down to $26. Her reasoning? "We think management is taking the right steps to turn the brand."

Amazon and the Turnaround Plan

One of the more intriguing pieces of the company's new strategy: Bath & Body Works plans to open a store on Amazon.com, Inc. (AMZN) in the first half of 2026, according to Hutchinson's note. That's a significant shift for a brand that's traditionally relied on mall traffic and its own e-commerce platform.

The analyst outlined four key priorities in Bath & Body Works' strategic transformation plan:

  • Re-focus on core categories and optimize the assortment to reduce complexity
  • Reclaim cultural relevance with fewer, more targeted marketing activations
  • Enhance digital and in-store experience and expand to new channels
  • Investments to be funded with $250 million in cost savings

There's a catch, though. Hutchinson noted that the investments and deleverage could put pressure on the company's earnings in 2026. So this turnaround isn't going to be painless.

The Numbers Tell a Story

Bath & Body Works currently has a market cap of $3.14 billion and an unusually low P/E ratio of 4.90, which highlights significant valuation concerns in the specialty retail sector. Trading near its 52-week low suggests the market isn't exactly brimming with confidence about consumer spending patterns or the brand's near-term prospects.

Still, if management can execute on this strategic reset—simplifying the product lineup, getting smarter about marketing, and meeting customers where they actually shop (hello, Amazon)—there might be a path forward. Whether investors have the patience to wait for it is another question entirely.

Back to News

Bath & Body Works Slashes Guidance, But Wall Street Sees Method in the Madness

MarketDash Editorial Team
16 days ago
BofA Securities keeps its Buy rating on Bath & Body Works despite a guidance cut that rattled investors, pointing to the retailer's strategic transformation plan and a potential Amazon storefront launching in 2026.

When Bath & Body Works Inc. (BBWI) lowered its guidance, the magnitude of the reset caught investors off guard. Shares took a hit, dropping 3.82% to $15.21—dangerously close to the 52-week low of $15.42. But here's the thing: at least one Wall Street analyst thinks the candle retailer is actually making the right moves.

The Analyst's Take

BofA Securities analyst Lorraine Hutchinson kept her Buy rating on Bath & Body Works, though she did trim her price target from $32 down to $26. Her reasoning? "We think management is taking the right steps to turn the brand."

Amazon and the Turnaround Plan

One of the more intriguing pieces of the company's new strategy: Bath & Body Works plans to open a store on Amazon.com, Inc. (AMZN) in the first half of 2026, according to Hutchinson's note. That's a significant shift for a brand that's traditionally relied on mall traffic and its own e-commerce platform.

The analyst outlined four key priorities in Bath & Body Works' strategic transformation plan:

  • Re-focus on core categories and optimize the assortment to reduce complexity
  • Reclaim cultural relevance with fewer, more targeted marketing activations
  • Enhance digital and in-store experience and expand to new channels
  • Investments to be funded with $250 million in cost savings

There's a catch, though. Hutchinson noted that the investments and deleverage could put pressure on the company's earnings in 2026. So this turnaround isn't going to be painless.

The Numbers Tell a Story

Bath & Body Works currently has a market cap of $3.14 billion and an unusually low P/E ratio of 4.90, which highlights significant valuation concerns in the specialty retail sector. Trading near its 52-week low suggests the market isn't exactly brimming with confidence about consumer spending patterns or the brand's near-term prospects.

Still, if management can execute on this strategic reset—simplifying the product lineup, getting smarter about marketing, and meeting customers where they actually shop (hello, Amazon)—there might be a path forward. Whether investors have the patience to wait for it is another question entirely.