Early drop of new fragrance I Scream Float sold out on TikTok Shop, highly anticipated collection also includes fan favorites Vampire Blood and Ghoul FriendCOLUMBUS, Ohio, June 30, 2025 /PRNewswire/ -- Summerween is back, and Bath & Body Works is celebrating with its fans earlier than ever. Today, it dropped its highly anticipated Summerween collection online for loyalty members, with the full assortment of more than 70 products coming to stores nationwide on July 7. Bath & Body Works Summerween collect ...

Group 1: Market Sentiment and Analysis - Market participants are increasingly favoring technical analysis over fundamental analysis, leading to a belief that fundamental data is already reflected in stock prices, reminiscent of the efficient market hypothesis, which has been repeatedly disproven [1] - Investors with significant buying power should leverage real data to expand portfolios beyond short-term trading, as recent retail sales data indicates potential winners in the retail sector [2][3] Group 2: Company-Specific Insights - Dollar Tree Inc. has been identified as a strong candidate for growth, with a current stock price of $98.71 and a 12-month price forecast of $90.26, indicating an 8.56% downside, but a potential rally of nearly 15% is anticipated based on analyst ratings [4][7] - Ulta Beauty Inc. is considered a safe investment, with a current price of $473.85 and a 12-month price forecast of $462.22, suggesting a 2.45% downside, yet it has a potential upside of 16% based on analyst targets [9][10] - Bath & Body Works Inc. is viewed as undervalued, with a current price of $28.23 and a 12-month price forecast of $42.00, indicating a potential upside of 48.80%, attracting significant institutional investment [13][14] Group 3: Institutional Activity - Institutional investors have increased their holdings in Ulta stock by 20.2%, reflecting positive sentiment and confidence in the company's future performance [12] - Bath & Body Works has seen $675 million in institutional investment in the last quarter, highlighting its appeal among investors amid favorable economic conditions [14]

Core Insights - Bath & Body Works (BBWI) reported a strong start to fiscal 2025, with gross profit reaching $646 million, a 6.6% year-over-year increase, and a gross margin of 45.4%, improving by 160 basis points compared to the previous year [1][11]. Financial Performance - The improvement in gross margin was primarily driven by a 100-basis-point rise in merchandise margin, attributed to low single-digit increases in mix-adjusted average unit retail (AUR), reflecting a stronger product mix and value engineering enhancements [2][11]. - Operating income for the first quarter reached $209 million, an 11.8% increase from the prior year, with the operating margin expanding by 120 basis points to 14.7% [5][11]. Operational Changes - The company strategically exited a third-party fulfillment center to streamline operations and reduce costs, expecting continued financial and customer service benefits [4]. - A re-evaluation of store assets' useful life led to reduced depreciation expenses, contributing to margin improvement [4]. Cost Management - Bath & Body Works faced external cost pressures from tariffs, with approximately 10% of its global spend exposed to China. However, the company effectively mitigated these impacts through an agile, predominantly U.S.-based supply chain and proactive cost management strategies [8]. - For the second quarter of fiscal 2025, the company anticipates a gross margin of approximately 41%, flat compared to the prior year, factoring in ongoing tariff impacts and licensing expenses from collaborations [9]. Valuation - BBWI is trading at a forward 12-month price-to-sales ratio of 0.76, significantly lower than the industry average of 1.64 and the sector average of 1.58, indicating a favorable valuation position [12].

Core Viewpoint - The article emphasizes the importance of fundamental analysis in identifying undervalued companies with long-term growth potential, advocating for a value investing approach that focuses on purchasing quality companies at a discount to their intrinsic value and holding them for extended periods to maximize earnings and shareholder returns [1]. Summary by Relevant Categories Investment Strategy - The investment strategy discussed is a blend of value investing principles and a focus on long-term growth, highlighting the belief in acquiring quality companies at a discount [1]. Company Characteristics - The focus is on identifying companies that are undervalued yet possess strong long-term growth potential, suggesting a preference for companies that can compound their earnings over time [1].

Core Insights - Bath & Body Works (BBWI) reported strong first-quarter fiscal 2025 results, with net sales meeting estimates and earnings surpassing expectations, showing year-over-year improvement [1][3] Financial Performance - Adjusted earnings were 49 cents per share, beating the Zacks Consensus Estimate of 47 cents, and increased by 28.9% from 38 cents in the prior year [3] - Net sales rose 2.9% year over year to $1,424 million, marking the strongest underlying sales performance since fiscal 2021, driven by successful product innovation and collaboration with Disney [3] - U.S. and Canada store net sales increased 4.3% to $1.11 billion, exceeding the consensus estimate of $1.09 billion, while direct sales fell 4.3% to $250 million, missing the estimate [4] Margin Analysis - Gross profit increased 6.6% year over year to $646 million, with gross margin expanding 160 basis points to 45.4% [5] - Operating income rose 11.8% to $209 million, with operating margin increasing 120 basis points to 14.7% [6] Store Operations - The company ended the quarter with 1,900 stores, including 1,787 in the U.S. and 113 in Canada, opening 13 and closing 8 stores during the quarter [8] - Internationally, partners opened 14 stores and closed 19, ending with 524 stores, with plans for at least 30 net new store openings in fiscal 2025 [9] Financial Health - Cash and cash equivalents stood at $636 million, with long-term debt of $3.89 billion and long-term operating lease liabilities of $895 million [10] - Total inventory increased by 7% year over year, attributed to tariffs and strategic inventory management [11] Future Outlook - For Q2 fiscal 2025, net sales are expected to be flat to up 2% year over year, with a gross margin forecast of 41% [12][14] - Fiscal 2025 net sales growth is projected at 1-3%, with a gross margin of 44% and full-year earnings per share estimated between $3.25 and $3.60 [16][18] - Free cash flow is projected between $750 million and $850 million, with an annual dividend of 80 cents per share and $300 million planned for share repurchases [19]

Core Insights - Bath & Body Works reported a strong start to 2025 with net sales increasing by 2.9% to $1.4 billion in Q1, and earnings per diluted share rising by 29% to $0.49, exceeding the company's projections [1] - The new CEO, Daniel Heaf, is planning a major strategy overhaul focused on customer insights and international growth [2][3] Financial Performance - The company experienced a 2.9% increase in net sales to $1.4 billion in the first quarter of 2025 [1] - Earnings per diluted share increased by 29% to $0.49, surpassing internal expectations [1] - The company has maintained its guidance for 2025, projecting a net sales growth of 1% to 3% [6] Leadership and Strategy - Daniel Heaf, the new CEO, aims to listen to customers for insights to drive product development and storytelling in an integrated global marketplace [2] - Heaf emphasized the importance of international growth, which currently represents about 5% of the business, and plans to explore scaling opportunities with partners and customers internationally [3] Store Operations - Bath & Body Works operates 1,900 stores in the US and Canada, along with 524 international franchised locations [5] - In the last quarter, 14 new international stores were opened, while 19 stores were closed, mainly in the US [5] - The company plans to open at least 30 net new stores internationally in 2025 [5] Market Position - The company has faced challenges, with stock down over 40% since May 2024 and a market capitalization that fell to about $6.6 billion, leading to its removal from the S&P 500 [3][4]

Financial Performance - Consolidated Net Sales for Q1 2025 were $1,424 million, an increase of $40 million or 2.9% compared to Q1 2024[86] - Operating Income for Q1 2025 was $209 million, up $22 million or 11.7% from Q1 2024, with an Operating Income rate of 14.7%[86] - Gross Profit increased by $40 million to $646 million, with a Gross Profit rate of 45.4%, up from 43.8% in Q1 2024[96] - In the first quarter of 2025, the company reported net sales of $1,355 million, with a gross profit of $602 million and a net income of $91 million[135] Expenses and Capital Expenditures - Total General, Administrative and Store Operating Expenses rose by $18 million to $437 million, with a rate of 30.7% of Net Sales[98] - Capital expenditures for Q1 2025 were $39 million, primarily for new off-mall stores and technology projects[109] - The company plans capital expenditures of approximately $250 million to $270 million for 2025, focusing on real estate and technology[111] Cash Flow and Share Repurchase - Net cash provided by operating activities in Q1 2025 was $188 million, compared to $76 million in Q1 2024[106] - The company repurchased 4.326 million shares for $135 million during Q1 2025[104] - The company repurchased a total of 4,326 thousand shares in 2025, with an average stock price of $30.47, and repurchased shares worth $135 million[115] - The company had remaining authority of $382 million under the January 2025 share repurchase program as of May 3, 2025[116] Debt and Credit Facilities - As of May 3, 2025, the total long-term debt stood at $3,886 million, a slight decrease from $4,282 million in May 2024[118] - The company had an available borrowing base of $639 million under its Asset-backed Revolving Credit Facility, with no borrowings outstanding as of May 3, 2025[123] - The company had $11 million of outstanding letters of credit as of May 3, 2025, reducing its availability under the ABL Facility to $628 million[124] - The principal value of outstanding long-term debt is $3,916 million, with an estimated fair value of $3,957 million[149] Tax and Effective Tax Rate - The effective tax rate for Q1 2025 was 28.4%, compared to 26.8% in Q1 2024[102] Risk Management - The company utilizes foreign currency forward contracts to partially offset exchange rate risks associated with Canadian dollar-denominated earnings[144] - Royalties from international partners are exposed to foreign currency exchange rate fluctuations, as they are calculated based on local currency sales[145] - The company monitors credit risk by limiting exposure to any single financial institution and reviewing the credit standing of franchise and wholesale partners[148] - The carrying values of accounts receivable, accounts payable, and accrued expenses approximate their fair values due to short maturities as of May 3, 2025[150] Investment Activities - The company maintains a diversified investment portfolio primarily composed of U.S. government obligations, U.S. Treasury, AAA-rated money market funds, commercial paper, and bank deposits[146][148] - The primary objectives of the investment activities are the preservation of principal, maintenance of liquidity, and maximization of interest income while minimizing risk[146] - The company does not believe there is any material risk to principal associated with interest rate changes due to the short-term nature of its investments[146] - Interest rate swap arrangements may be utilized to adjust exposure to interest rate risk as needed[147] - All outstanding long-term debt as of May 3, 2025, has fixed interest rates, limiting exposure to interest rate risk[147] Credit Ratings - The company's credit ratings as of May 3, 2025, were Ba2 from Moody's and BB+ from S&P for corporate ratings, with a stable outlook[128] Fixed Charge Coverage Ratio - The company maintained a fixed charge coverage ratio requirement of not less than 1.00 to 1.00 during an event of default, but was not required to maintain this ratio as of May 3, 2025[126]

Financial Performance - Bath & Body Works reported revenue of $1.42 billion for the quarter ended April 2025, reflecting a year-over-year increase of 2.9% [1] - The EPS for the same period was $0.49, compared to $0.38 a year ago, indicating a positive growth [1] - The reported revenue matched the Zacks Consensus Estimate of $1.42 billion, resulting in a surprise of -0.02%, while the EPS exceeded the consensus estimate of $0.47 by 4.26% [1] Key Metrics - The stock of Bath & Body Works has returned -0.1% over the past month, contrasting with the Zacks S&P 500 composite's increase of +6.7% [3] - The company currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3] Store Operations - Total company-operated stores were reported at 1,900, slightly below the average estimate of 1,903 by five analysts [4] - In the United States, there were 1,787 stores, compared to the average estimate of 1,790 [4] - Geographic net sales in the U.S. and Canada reached $1.11 billion, surpassing the four-analyst average estimate of $1.09 billion, with a year-over-year change of +4.2% [4] International Performance - Geographic net sales from international operations were reported at $64 million, slightly below the average estimate of $65.31 million, but showing a year-over-year increase of +10.3% [4] - Direct sales in the U.S. and Canada amounted to $250 million, which was below the average estimate of $265.49 million, reflecting a year-over-year decline of -4.2% [4]

Financial Data and Key Metrics Changes - The company reported net sales of $1.4 billion, an increase of 2.9% compared to the prior year, marking the strongest underlying sales performance since 2021 [28] - Earnings per diluted share were $0.49, exceeding the high end of the guidance range [17] - Gross profit rate was 45.4%, an increase of 160 basis points year-over-year, driven by a 100 basis point improvement in merchandise margin [30][31] Business Line Data and Key Metrics Changes - Body care grew low single digits, driven by the success of the Disney Princess line and the expansion of the everyday luxuries line [21] - Home fragrance also grew low single digits, supported by single wick candles and wallflowers [21] - Soaps and sanitizers grew mid single digits, driven by on-the-go assortments [21] Market Data and Key Metrics Changes - International retail sales grew approximately 10% this quarter, representing about 5% of total net sales [27][30] - U.S. and Canadian store net sales totaled $1.1 billion, an increase of 4.3% versus the prior year [29] Company Strategy and Development Direction - The company aims to transform Bath and Body Works to accelerate growth and deepen customer connections, focusing on consumer-centric strategies [9][10] - Plans include enhancing digital capabilities, improving packaging, exploring new distribution forms, and expanding internationally [12][14] - The strategy will prioritize fewer, bolder initiatives to drive consistent and repeatable growth [53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to absorb current tariff levels and maintain guidance for the year [33][34] - The company is optimistic about the innovation pipeline for the second half of the year, including new product launches and collaborations [50][75] - Management emphasized the importance of emotional connections with consumers and the need for compelling storytelling in marketing [61][92] Other Important Information - The loyalty program has approximately 39 million active members, up 4% from the prior year, driving increased customer engagement [23][24] - The company plans to maintain capital expenditures of $250 million to $270 million, focusing on real estate and technology [37] Q&A Session Summary Question: What attracted you to Bath and Body Works? - The CEO highlighted the emotional connection of the brand and its strong foundation, including a large number of stores and loyal customers [44] Question: Can you elaborate on the go-forward top line commentary? - Management noted that Disney was a key driver of growth and expressed confidence in upcoming product launches [48] Question: What are the building blocks of opportunity for growth? - The CEO mentioned focusing on fewer priorities and leveraging existing investments to drive growth [55] Question: How do you view pricing strategy in light of tariffs? - Management stated they will remain agile and responsive to customer needs while maintaining value [103] Question: What is the strategy for international expansion? - The CEO emphasized a selective approach to international markets, focusing on understanding local consumer needs [105] Question: How do you plan to enhance marketing efforts? - Management indicated a shift towards emotional storytelling and less reliance on price promotions [61]

Financial Data and Key Metrics Changes - The company reported net sales of $1.4 billion, an increase of 2.9% compared to the prior year, marking the strongest underlying sales performance since 2021 [25][14] - Earnings per diluted share were $0.49, exceeding the high end of the guidance range [14] - Gross profit rate was 45.4%, an increase of 160 basis points year-over-year, driven by a 100 basis point improvement in merchandise margin [27][28] Business Line Data and Key Metrics Changes - Body care grew low single digits, driven by the success of the Disney Princess line and the expansion of the everyday luxuries line [18][20] - Home fragrance also grew low single digits, with strong performance from single wick candles and wallflowers [18] - Soaps and sanitizers grew mid single digits, supported by on-the-go products [19] Market Data and Key Metrics Changes - U.S. and Canadian store net sales totaled $1.1 billion, an increase of 4.3% versus the prior year [26] - Direct net sales were $250 million, a decrease of 4.3% compared to last year, but adjusted for Buy Online Pickup in Store (BOPIS), direct sales outperformed store sales [26] - International sales, representing about 5% of total net sales, grew approximately 10.1% to $64 million [27] Company Strategy and Development Direction - The company aims to transform Bath and Body Works by focusing on consumer-centric strategies, enhancing digital capabilities, and exploring new distribution channels [7][10] - International expansion is a key pillar of the long-term strategy, with plans for at least 30 new store openings in 2025 [29][11] - The company is committed to fewer, bolder priorities to accelerate growth through consistent and repeatable drivers [49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to absorb current tariff levels and maintain guidance for net sales growth of 1% to 3% for the full year [30][31] - The leadership team is optimistic about the innovation pipeline for the second half of the year, including new product launches and collaborations [46][71] - The company is focused on enhancing customer engagement through its loyalty program, which has approximately 39 million active members [21][22] Other Important Information - The company plans to invest $250 million to $270 million in capital expenditures during the year, focusing on real estate and technology [33] - The loyalty program has been enhanced to increase reward redemption options, aiming to drive higher engagement and sales [22] Q&A Session Summary Question: What attracted you to Bath and Body Works? - The CEO highlighted the emotional connection consumers have with the brand and the strong foundation of the business, including a dedicated workforce and a vertically integrated supply chain [40][41] Question: Can you elaborate on the go-forward top line commentary? - Management noted that Disney was a key driver of sales growth and expressed confidence in upcoming product launches, including Father's Day promotions [44][46] Question: What are the long-term growth rates for body care and home fragrance? - Management expects body care to grow above low single digits over time, while home fragrance is currently facing market pressures but is still growing [66][67] Question: How do you view pricing strategy in light of tariffs? - The company plans to remain agile with pricing, ensuring that it meets customer expectations while maintaining value [100] Question: What are the plans for international expansion? - The CEO emphasized the importance of selecting priority markets and matching them with appropriate business models for growth [101][102]