Is Bath & Body Works Stock (NYSE: BBWI) Sell-Off ‘Overdone’?

During early pre-market trading, Bath & Body Works' stock (NYSE: BBWI) trades at $28.68, after a difficult day in the markets, shedding 6.23% through Thursday's session. This continues what has been a bearish trend at BBWI, cementing a year-to-date loss of over 24% and a 43% decline over the previous twelve months.

The sharp sell-off, which accelerated following the company’s first quarter earnings release, has left some questioning whether the market’s reaction is justified.

Despite the recent pain, some analysts argue that the sell-off may be overdone. Goldman Sachs, for example, lowered its price target on BBWI to $43 from $44 but maintained a Buy rating, noting that the company’s solid first quarter results and resilient consumer brand could support a rebound once macro headwinds abate. The firm points out that the 6% post-earnings drop appears disproportionate, given that full-year EPS estimates were only revised down by about 3%.

Nonetheless, bearish sentiment remains entrenched. The stock’s underperformance relative to the broader market, coupled with ongoing margin pressures and execution risks, continues to weigh on investor confidence.

Bath & Body Works reported first quarter 2025 net sales of $1.4 billion, a 3% year-over-year increase and at the high end of management’s guidance. Earnings per diluted share surged 29% to $0.49, modestly beating analyst expectations. The company reaffirmed its full-year outlook, projecting 1-3% sales growth and guiding for EPS in the range of $3.25 to $3.60.

The reaffirmed guidance, while positive in absolute terms, reflects underlying concerns about persistent headwinds: new U.S. tariffs on Chinese imports, weakening discretionary demand, and macroeconomic uncertainty. These factors, analysts argue, are likely to constrain growth and margin expansion for the foreseeable future.

Adding to the uncertainty, Bath & Body Works announced a major leadership change in May, appointing former Nike executive Daniel Heaf as CEO following Gina Boswell’s departure. While Heaf’s experience in global brand management and digital transformation is seen as a potential catalyst for change, the market is taking a wait-and-see approach. Investors are looking for clear evidence that new leadership can accelerate growth, particularly in international markets and among younger, male consumers, a demographic where BBWI has historically underperformed.

While the company’s latest results demonstrate operational strength and the brand retains significant consumer appeal, persistent macroeconomic headwinds and execution risks have cast a long shadow over the stock. The sharp sell-off may have gone too far, especially if new leadership can deliver on growth initiatives and if economic conditions stabilize. For now, however, investors appear unconvinced, and the onus is on management to restore confidence and reignite growth. Whether the current share price represents a value opportunity or a value trap will depend on how effectively Bath & Body Works navigates the challenges ahead.