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Investing.com -- Bath & Body Works is facing a broad pullback on Wall Street after its latest quarter has reinforced concerns about falling sales and a longer road to recovery than previously expected.
Morgan Stanley said the quarter and guidance suggest BBWI’s goal of returning to low single digit sales growth and rebuilding margins is becoming harder to reach.
Structural headwinds includes tougher competition in beauty retail, low traction with younger shoppers and the company’s earlier reliance on collaborations and promotions.
It expects average sales to decline and warned that profitability could erode further given the investment needed to reset the business.
The rating was cut to equal weight and the price target lowered to $18.
Telsey downgraded the stock to market perform with a $17 target after an EPS miss tied to soft sales and weaker gross margin.
BBWI had been treated as a recovery story after strong pandemic-era performance, but a softer Q4 outlook and a longer path to rebuilding sales and margin show the recovery is taking more time. It expects continued pressure next year as product resets and brand investments only begin to influence results in the second half of 2026.
Goldman Sachs cut its rating to neutral and reduced its target to $17. Brokerge said BBWI’s new strategy marks a significant reset, including a tighter assortment, reduced reliance on collaborations, increased marketing spending and a new partnership with Amazon.
Goldman said the pivot surprised investors because it points to negative sales growth in 2026, delaying any improvement until 2027.
It added that BBWI’s seasonal categories are under pressure and that the early holiday period has been challenging, with sales trending down high single digits.