Bath & Body Works: Positive After Q1 EPS Beat

Core Viewpoint - Bath & Body Works (BBWI) reported strong Q1 2024 results, exceeding revenue and EPS expectations, yet shares fell nearly 10%, which appears irrational given the positive performance [4][5]. Company Performance - In Q1 2024, BBWI achieved net sales of $1.4 billion, surpassing analysts' expectations of $1.37 billion, and reported EPS of $0.38 against an expectation of $0.33 [4]. - The company experienced a revenue decrease of only 1% in Q1 2024, compared to a guidance of a decrease between 2% and 4.5% [4]. - Full-year 2024 EPS guidance was narrowed to between $3.05 and $3.35, indicating a slight upward adjustment from previous expectations [4]. Market Position - BBWI holds approximately 5% market share in the Beauty, Cosmetics & Fragrance Stores industry, positioning it as a significant player in the fragrance segment, especially in brick-and-mortar stores [4]. - Major competitors include Ulta Beauty with a 20% market share and Sephora with nearly 7% [4][2]. Customer Engagement - The company has a successful loyalty program with 37 million members, which encourages frequent purchases, similar to Ulta Beauty's 43 million members [3]. Valuation - With the current EPS guidance, BBWI is expected to trade at a forward P/E ratio between 14 and 15, which is considered reasonable within the industry context [5]. - Despite the recent drop in share price, the valuation remains attractive, suggesting a potential buying opportunity [5].