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On Friday, Raymond (NSE:RYMD) James analyst Olivia Tong confirmed an Outperform rating on Bath & Body Works Inc. (NYSE: BBWI), maintaining a $37.00 price target. The endorsement follows Bath & Body Works’ recent preannouncement of first-quarter results that exceeded expectations. The company reported a year-over-year sales increase of 3% and earnings per share (EPS) of $0.49, alongside the introduction of new CEO Daniel Heaf.
The positive results were attributed to sales and gross margin outperformance, with gross margins reaching 45.4%, surpassing both Raymond James’ estimate of 44.8% and the consensus of 44.2%. Contributing factors to this margin improvement included a 100 basis point increase in merchandise margin and a low-single-digit rise in average unit retail (AUR), coupled with favorable operating leverage. The company maintains strong fundamentals with annual revenue of $7.3 billion and a healthy current ratio of 1.48x, indicating solid liquidity. For deeper insights into BBWI’s financial health and additional metrics, check out the comprehensive Pro Research Report available on InvestingPro.
Despite the introduction of tariffs (30% on goods from China and 10% from other locations), Bath & Body Works has kept its full-year sales growth forecast at 1-3% and an EPS range of $3.25-$3.60. This guidance incorporates the current tariff situation, suggesting that the strong first-quarter performance and ongoing progress in sales, AUR, and margins are compensating for the additional tariff costs.
The second-quarter outlook presented by the company is somewhat conservative, with projected sales ranging from flat to a 2% increase and EPS between $0.33 and $0.38. Nevertheless, the report highlighted growth in core categories, faster expansion in adjacent areas, and the expectation that new product innovations and collaborations, particularly in the second half of the year, will continue to propel sales momentum.
Tong expressed optimism about the company’s future under its new leadership, emphasizing an increased focus on innovation, digital strategies, and marketing. These initiatives are anticipated to support sustained growth despite broader economic challenges. The analyst’s reiteration of the Outperform rating suggests confidence in Bath & Body Works’ strategic direction and resilience.
In other recent news, Bath & Body Works Inc. reported its financial results for the first quarter of 2025, showcasing an earnings per share (EPS) of $0.49, which surpassed analyst expectations of $0.42. However, the company experienced a slight shortfall in revenue, reporting $1.4 billion against the anticipated $1.42 billion. Despite the revenue miss, the company maintained its full-year guidance of 1-3% net sales growth and an EPS range of $3.25 to $3.60. Morgan Stanley (NYSE:MS) adjusted its price target for Bath & Body Works, lowering it from $43 to $41, while maintaining an Overweight rating, highlighting concerns about second-quarter guidance and tariff protection. Piper Sandler also revised its price target to $37 from $39, with analyst Korinne Wolfmeyer expressing optimism about the company’s future, citing strong first-quarter results and new leadership. Bath & Body Works continues to focus on product innovation, including a successful Disney (NYSE:DIS) Princess collection, which contributed to its first-quarter performance. The company is also exploring international expansion and new distribution channels to drive future growth.
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