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Investing.com - TD Cowen has reiterated its Buy rating and $38.00 price target on Bath & Body Works Inc. (NYSE:BBWI), despite mixed second-quarter results and increased tariff pressures.
The retailer raised guidance slightly, with sales growth up 10 basis points and earnings per share approximately 1% higher at the midpoint. However, these improvements were offset by an $85 million tariff impact, higher SG&A deleverage, and softer-than-expected Q2 sales growth.
Bath & Body Works experienced sequentially weaker traffic and a low-single-digit percentage decline in body care sales during the quarter. TD Cowen noted that without tariffs, gross margins would have improved by approximately 100 basis points year-over-year in fiscal 2025, and EPS could have been about 7% higher than current guidance.
The firm estimates that approximately $30 million of the tariff impact may not repeat next year. TD Cowen acknowledged that the retailer needs enhancements in digital capabilities, connecting with younger consumers, and simplifying the in-store experience.
The research firm expects several initiatives to drive improvements in the second half of the year, including a new digital app, Disney partnership, expansion into college stores, and enhanced marketing efforts.
In other recent news, Bath & Body Works Inc. reported its second-quarter 2025 earnings, which revealed a slight miss on earnings per share compared to market expectations. The company posted an EPS of $0.37, falling short of the forecasted $0.38, resulting in a 2.63% negative surprise. Revenue for the quarter stood at $1.55 billion, which aligned with analysts’ forecasts. These developments have been closely watched by investors and analysts alike. The earnings report underscores the importance of meeting market expectations in maintaining investor confidence. Analyst firms have yet to release any upgrades or downgrades following this earnings announcement. The recent earnings call has sparked discussions about the company’s future performance. Investors are keenly observing how Bath & Body Works will navigate the challenges ahead.
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