Bath & Body Works(BBWI) MarketBeat·2024-08-29 11:30Core Viewpoint - Bath & Body Works has experienced a significant decline in stock performance, with shares falling approximately 24% in 2024, contrasting with a 4% increase in the consumer discretionary sector [1][2]. Financial Performance - The company reported that 77% of net sales in fiscal Q1 2025 came from physical stores in the U.S. and Canada, while online sales accounted for 19% and international sales for 4% [3]. - Sales have declined for six consecutive quarters, with revenues around 40% below pre-pandemic peak levels, although net income and free cash flow remain stable due to increased margins [4]. - Following Q2 2024 earnings, the company lowered its full-year adjusted EPS guidance to a midpoint of 3.25 [6]. Market Position and Analyst Ratings - Analysts have downgraded Bath & Body Works, with Citigroup and Barclays reducing price targets by nearly 30%, now viewing the stock as fairly valued [2]. - Despite the downgrades, Deutsche Bank maintains a bullish outlook with a price target of $54, suggesting over 50% upside potential [2]. Strategic Initiatives - The company is revamping its strategy by enhancing digital experiences through a partnership with Accenture, including the introduction of a "fragrance finder" to improve customer engagement [7]. - Bath & Body Works is transitioning to off-mall locations, with plans to increase the percentage of off-mall stores from 50% to two-thirds, aiming to reduce costs associated with declining mall foot traffic [7][8]. Customer Engagement and Growth Opportunities - The loyalty program has grown to 37 million members, representing 80% of U.S. sales, with new customers making up 43% of enrollees [9]. - There are opportunities to boost sales by promoting frequent purchases, introducing a subscription tier, and expanding offerings for male customers, where the company has shown strength [10].