Raymond James Downgrades Bath & Body Works (BBWI) Stock

Bath & Body Works, Inc. (NYSE:BBWI) is one of the Worst Performing Stocks to Invest in on the Dip. On November 12, Raymond James analyst Olivia Tong downgraded the company’s stock to “Market Perform” from “Outperform,” as reported by The Fly. As per the analyst, the company’s growth is expected to be below the long-term potential because improvements from better digital capabilities, product, and distribution would take time.

The firm believes that near-term challenges are expected to pressure growth and margins. Its Q2 2025 operating income came in at $157 million, reflecting a fall of $26 million, or 13.9% YoY, and its operating income rate fell to 10.2% from 12.0%. The decrease in rate was mainly because of increased general, administrative, and store operating expenses due to leadership transition costs.

In Q2 2025, its total net sales amounted to $1.5 billion, reflecting 1.5% YoY growth, with total North American net sales rising $26 million mainly because of marginal increases in transactions and average dollar sales. It expects FY 2025 earnings per diluted share of between $3.28 – $3.53 compared to earnings per diluted share of $3.61 in FY 2024.

The firm’s channel checks over the previous 2 months demonstrate that Bath & Body Works, Inc. (NYSE:BBWI)’s recent innovations have fallen short amidst increased discounting in stores and online. The company remains focused on elevating the digital experience, amplifying product efficacy, and expanding its distribution to cater to consumers.

Irrespective of the macro environment, the company remains well-placed to serve consumers with affordable and high-quality products. Bath & Body Works, Inc. (NYSE:BBWI)’s priority areas include accelerating top-line growth while, at the same time, maintaining or expanding margins, improving operational excellence, and finally, consistently deploying its healthy cash flow towards growth opportunities.

Bath & Body Works, Inc. (NYSE:BBWI)’s full-year guidance includes the expected impact of $400 million of cash deployed in share repurchases, a rise from the previous expectation of $300 million. It expects to generate FCF of $750 million – $850 million for FY 2025. It narrowed its FY 2025 net sales guidance from 1% – 3% growth to 1.5% – 2.7% growth as compared to $7,307 million in FY 2024.

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Disclosure: None. This article is originally published at Insider Monkey.