Bath & Body Works (BBWI) is entering a "multiyear process" to revamp direct-to-consumer sales growth, though risks tied to its expansion into Amazon.com (AMZN) and other mass retail channels could pressure long-term margins, UBS Securities said in a report emailed Thursday.

The firm said improving product assortments, brand positioning and operating models will take time, while broader wholesale distribution could cannibalize the company's direct-to-consumer business and create structural margin headwinds.

Bath & Body Works reiterated its fiscal 2026 earnings guidance of $2.40 to $2.65 per share after Q1 results, while its management said its Amazon rollout has delivered double-digit week-over-week growth since February and attracted "younger and more affluent consumers," the report said.

While the company continues to plan to deliver $175 million in cost savings this fiscal year, its international business faces substantial pressure, according to the report.

UBS maintained a neutral rating on Bath & Body Works with a price target of $19.

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