Bath & Body Works' (BBWI) strategic reset will likely reduce its earnings for fiscal 2025 and fiscal 2026, BofA Securities said in a note Friday.
The new turnaround plan centers on focusing on core product lines, simplifying the assortment, revamping marketing, improving digital and store experiences, and funding investments through $250 million in savings, the investment firm said.
BofA estimates EPS of $2.91 and $2.50 in fiscal 2025 and 2026, respectively, versus $3.33 in fiscal 2024. It also projects a small sales decline for fiscal 2026 and a return to growth in fiscal 2027 under the new strategy.
Bath & Body Works has now limited bulk resellers that contributed lower margin revenue as it launches its Amazon store in H1 of fiscal 2026 and builds its presence on the e-commerce platform to gain additional customers, according to the note.
The firm added that promotions, higher operating costs and deleveraging will weigh on margins during fiscal 2026.
BofA maintained its buy rating for Bath & Body Works and lowered its price target to $26 from $32.
Shares of the company were down 4.1% in recent trading.
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