Bath & Body Works Delivers Surprise Beat, But Recovery Still Scented with Caution
Bath & Body Works (NYSE:BBWI) is starting 2025 with some tractionand a new CEO at the helm. The company reported first-quarter sales of $1.42 billion, up 2.9% from a year ago, while earnings per share jumped 29% to $0.49, exceeding guidance. Gross margin rose 160 basis points to 45.4%, and operating income grew nearly 12% year-over-year, suggesting recent pricing moves or cost efficiencies may be playing out. The company reaffirmed full-year guidance of 1% to 3% sales growth and EPS between $3.25 and $3.60, even as it navigates tariff pressures and executes a $300 million share buyback.
Warning! GuruFocus has detected 4 Warning Signs with BBWI.
Daniel Heaf officially stepped in as CEO on May 16, and his early remarks reflect ambition to extend BBWI's leadership in fragrance and beauty globally. He's inheriting a brand with strong cash flow projectionsup to $850 million in 2025but one that still hasn't reclaimed the scale or earnings power of its pre-Covid peak. Q2 guidance is cautious: flat to 2% sales growth and EPS between $0.33 and $0.38, possibly reflecting expected disruption from the leadership change. Still, the company's largely U.S.-anchored supply chain could offer a buffer in an increasingly fragmented global trade environment.
From a longer-term lens, the chart tells a sobering truth. BBWI's revenue, net income, and EBITDA have stabilized post-pandemic, but remain a step behind the 20182019 highs. Despite recent gains, investors might view this as a company in recovery modenot revival just yet.
The upward drift in margins and earnings is promising, but the path back to pre-Covid performance isn't guaranteed. That said, if Heaf's global vision takes root and margin gains hold, BBWI could be carving out the early innings of a second act.
This article first appeared on GuruFocus.
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