What Happened?

Shares of personal care and home fragrance retailer Bath & Body Works (NYSE:BBWI) fell 12.8% in the afternoon session after the company reported weak fourth-quarter results: Sales declined 4.3% year-on-year, partly due to a calendar shift. Looking ahead, the company expects full-year revenue to grow modestly by 1% to 3%, with EPS projected to decline compared to the prior year. Meanwhile, Bath & Body Works exceeded analysts' EBITDA expectations this quarter, and its gross margin slightly outperformed Wall Street estimates. However, despite these positive aspects, overall performance remained weak.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Bath and Body Works? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Bath and Body Works’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Bath and Body Works and indicate this news significantly impacted the market’s perception of the business. 

The previous big move we wrote about was 9 days ago when the stock gained 9.1% on the news that JP Morgan upgraded the stock's rating from Neutral to Buy. The firm added "Our recent fieldwork and management access points to a fundamental inflection on both the top and bottom-line into FY25 upgrading BBWI to Overweight raising our Dec '25 price target to $47."

Bath and Body Works is down 4% since the beginning of the year, and at $36.41 per share, it is trading 29.9% below its 52-week high of $51.94 from May 2024. Investors who bought $1,000 worth of Bath and Body Works’s shares 5 years ago would now be looking at an investment worth $1,580.

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