Bath & Body Works, Inc. (NYSE: BBWI)

Sector: Consumer Cyclical Industry: Specialty Retail CIK: 0000701985
Market Cap 5.61 Bn
P/B -3.45
P/E 6.39
P/S 0.76
ROIC (Qtr) 26.37
Div Yield % 4.05
Rev 1y % (Qtr) -0.99
Total Debt (Qtr) 4.98 Bn
Debt/Equity (Qtr) -3.13
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About

Bath & Body Works, Inc. (BBWI), a prominent player in the retail sector, has established itself as a leading specialty retailer of fragrances, body care, and home fragrance products. Founded in 1963 in Columbus, Ohio, the company has expanded its footprint to become a global omnichannel brand present in over 40 countries. BBWI's business model encompasses the operation of physical stores and an e-commerce platform, while also engaging in franchise, license, and wholesale arrangements. Fragrances, body care products, and home fragrance products...

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Investment thesis

Bull case

  • Operating cash flow of 1.18B provides strong 34.71x coverage of stock compensation 34M, indicating sustainable incentive practices.
  • Robust free cash flow of 946M exceeds capital expenditure of 234M by 4.04x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 4.20B provides 12.79x coverage of working capital 328M, indicating strong operational backing.
  • Operating cash flow of 1.18B provides solid 0.76x coverage of current liabilities 1.55B, showing strong operational health.
  • Operating cash flow of 1.18B fully covers other non-current liabilities 241M by 4.90x, showing strong long-term stability.

Bear case

  • Operating cash flow of 1.18B barely covers its investment activities of (215M), with a coverage ratio of -5.49, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 236M against inventory of 1.25B, the 0.19 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 1.18B provides thin coverage of dividend payments of (169M) with a -6.98 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 946M represents just -2.72x of debt issuance (348M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of (1.75B) provide limited buffer against comprehensive income items of 73M, which is -24.03x, indicating elevated exposure to market risks.

Segments Breakdown of Revenue (2025)

Revenue Channel Breakdown of Revenue (2025)

Peer comparison

Companies in the Specialty Retail
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ULTA Ulta Beauty, Inc. 32.20 Bn 27.06 2.69 2.57 Bn
2 WSM Williams Sonoma Inc 29.62 Bn 25.19 3.40 1.47 Bn
3 TSCO Tractor Supply Co /De/ 28.42 Bn 25.23 1.93 5.72 Bn
4 DKS Dick'S Sporting Goods, Inc. 24.98 Bn 88.10 4.64 7.70 Bn
5 CASY Caseys General Stores Inc 24.65 Bn 59.49 1.65 2.92 Bn
6 BBY Best Buy Co Inc 17.85 Bn 11.66 0.41 4.09 Bn
7 MUSA Murphy USA Inc. 15.91 Bn 61.33 1.35 2.75 Bn
8 FIVE Five Below, Inc 11.68 Bn 37.94 2.64 2.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.19 2.23
EV to Cash from Ops. EV/CFO 11.43 14.70
EV to Debt EV to Debt 2.19 79.39
EV to EBIT EV/EBIT 7.99 -40.16
EV to EBITDA EV/EBITDA 7.02 11.51
EV to Free Cash Flow [EV/FCF] EV/FCF 16.63 -286.14
EV to Market Cap EV to Market Cap 1.94 6.33
EV to Revenue EV/Rev 1.47 2.39
Price to Book Value [P/B] P/B -3.45 32.78
Price to Earnings [P/E] P/E 6.39 -36.32
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 4.14 -4.05
Dividend Payout Ratio % Div Payout % (Qtr) 24.70 14.19
Dividend per Basic Share Div per Share (Qtr) 0.80 0.71
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 17.44 18.58
Interest Coverage Int. cover (Qtr) 4.37 4.43
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -9.35 13.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 23.56 33.75
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 0.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -25.13 -272.99
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -6.26 588.45
EBIT Growth (1y) % EBIT 1y % (Qtr) -9.04 29.27
EBT Growth (1y) % EBT 1y % (Qtr) -8.08 -92.23
EPS Growth (1y) % EPS 1y % (Qtr) -21.17 -121.86
FCF Growth (1y) % FCF 1y % (Qtr) 47.12 71.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -0.73 2.50
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.47 1.24
Cash Payout Ratio Cash Payout (Qtr) 0.12 0.04
Cash Ratio Cash Ratio (Qtr) 0.15 0.74
Current Ratio Curr Ratio (Qtr) 1.21 3.56
Debt to Equity Ratio Debt/Equity (Qtr) -3.13 25.92
Interest Cover Ratio Int Coverage (Qtr) 4.37 4.43
Times Interest Earned Times Interest Earned (Qtr) 4.37 4.43
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 20.40 -42.64
EBIT Margin % EBIT Margin % (Qtr) 16.83 -131.12
EBT Margin % EBT Margin % (Qtr) 12.99 -64.70
Gross Margin % Gross Margin % (Qtr) 44.10 30.93
Net Profit Margin % Net Margin % (Qtr) 9.50 -65.71