BBWI Stock Forecast & Price Target

Bath & Body Works has revised its annual sales growth guidance for fiscal 2024, now projecting an increase of 1.5% to 2.7% year-over-year, indicating a stable revenue outlook amidst changing consumer dynamics. For the third quarter specifically, the company anticipates sales growth between 1% and 3% year-over-year, reflecting consistent performance as sales expectations align with prior consensus metrics. With a well-established brick-and-mortar presence and prospects for growth through store upgrades, digital channels, and category expansions, the company is positioned for continued resilience in its market segment.

Bath & Body Works experienced a significant decline in direct revenues, posting a 10.1% year-over-year decrease in the second quarter, which amounted to $267 million, following a series of declines over the past year. The company's body care category particularly underperformed, indicating weakness in consumer demand and reliance on specific seasonal promotions, as illustrated by a disappointing Mother’s Day sales period. Additionally, the earnings miss was attributed to greater-than-expected operating deleverage, despite a modest improvement in gross margins, suggesting ongoing challenges in maintaining profitability amidst declining sales levels.