Bath & Body Works, Inc. (BBWI): A Bull Case Theory 

We came across a bullish thesis on Bath & Body Works, Inc. on Waterboy Stocks’s Substack. In this article, we will summarize the bulls’ thesis on BBWI. Bath & Body Works, Inc.’s share was trading at $25.68 as of October 7th. BBWI’s trailing and forward P/E were 7.68 and 6.75 respectively according to Yahoo Finance.

Bath & Body Works, Inc. (BBWI) is a leading home fragrance and body care retailer with a $5.9 billion market cap and $10.5 billion enterprise value, offering products like candles, hand creams, soaps, and sanitizers that resonate strongly with U.S. consumers. Its loyalty program, with 39 million members representing roughly 10% of the U.S. population, drives 80% of annual sales, totaling $7.3 billion in 2025, reflecting high engagement and satisfaction rates above 90%. Despite a devoted customer base, sales have declined steadily from $7.9 billion in 2022 to $7.3 billion in 2025, weighing on investor sentiment and pushing the stock down over 60% since its 2021 peak.

Management has deployed abundant free cash flow to reduce share count by a quarter since 2022 and pay down $1 billion of debt, leaving a current balance of $3.9 billion, while continuing aggressive buybacks. The company appointed Daniel Heaf, formerly Nike’s Chief Transformation and Strategy Officer, as CEO in May 2025. Heaf emphasized the need to strengthen BBWI’s digital capabilities, calling out the current platform as a weak spot and outlining an ambitious, phased plan to relaunch mobile web and enhance e-commerce, aiming to drive both online and in-store sales.

Under Heaf’s leadership, guidance includes 1–3% sales growth, 42.2% gross margins, $750–$850 million free cash flow, and $400 million in share repurchases. With high returns on tangible equity, resilient cash flow, and clear digital initiatives underway, BBWI represents an undervalued investment opportunity, offering a compelling entry point at 7–8x forward free cash flow, with potential upside if operational improvements and digital transformation succeed.

Previously we covered a bullish thesis on Ulta Beauty, Inc. (ULTA) by @wallstengine in May 2025, which highlighted accelerating comp momentum, improving consumer engagement, and conservative margin guidance as catalysts for a fundamentals rebound. The company’s stock price has appreciated approximately by 36.78% since our coverage. The thesis still stands as ULTA continues to benefit from strong fundamentals. Waterboy Stocks shares a similar perspective but emphasizes Bath & Body Works, Inc.’s (BBWI) digital transformation and capital returns, contrasting ULTA’s rebound-driven thesis.

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Disclosure: None.