Stock Analysis & Valuation Bath & Body Works, Inc. (0JSC.L)

• Previous Close: £21.84
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	31.50	44
Intrinsic value (DCF)	11.52	-47
Graham-Dodd Method		n/a
Graham Formula	18.20	-17

Strategic Investment Analysis

Company Overview

Bath & Body Works, Inc. is a leading specialty retailer in the home fragrance, body care, and sanitizer products market, operating under well-known brands such as Bath & Body Works and White Barn. Headquartered in Columbus, Ohio, the company serves customers through a vast network of 1,755 company-operated retail stores in the U.S. and Canada, along with 338 international partner-operated stores via franchise, license, and wholesale agreements. With a strong digital presence, Bath & Body Works also leverages e-commerce to expand its reach. Formerly known as L Brands, Inc., the company rebranded in August 2021 to focus on its core business. Founded in 1963, Bath & Body Works has established itself as a dominant player in the consumer cyclical sector, particularly in specialty retail, by offering high-quality, trend-driven personal care and home fragrance products. Its strong brand loyalty and omnichannel strategy position it well in a competitive market.

Investment Summary

Bath & Body Works presents a compelling investment case with its strong brand recognition, consistent revenue growth ($7.3B in FY 2025), and solid profitability ($798M net income). The company’s high beta (1.84) suggests sensitivity to market movements, which may appeal to growth-oriented investors. However, its substantial total debt ($4.96B) and capital-intensive retail model warrant caution. The dividend yield (approximately 1.2% based on a $0.80 per share dividend) adds income appeal, but investors should monitor debt levels and consumer spending trends, given its cyclical nature. The company’s strong operating cash flow ($886M) and cash reserves ($674M) provide financial flexibility, though competition in the personal care space remains intense.

Competitive Analysis

Bath & Body Works holds a competitive edge through its strong brand identity, extensive retail footprint, and product innovation in home fragrances and body care. Its direct-to-consumer model, combining physical stores with e-commerce, enhances customer engagement and retention. The company’s focus on seasonal and limited-edition products drives repeat purchases and brand loyalty. However, it faces stiff competition from mass-market retailers (e.g., Target, Walmart) that offer lower-priced alternatives and from premium brands like L’Occitane and The Body Shop, which emphasize natural ingredients and sustainability. Bath & Body Works’ reliance on mall-based locations could be a vulnerability as foot traffic trends evolve post-pandemic. Its international expansion through franchising mitigates some risk but also limits control over brand execution abroad. The company’s ability to maintain pricing power and innovate in a crowded market will be critical to sustaining its leadership position.

Major Competitors

• Unilever PLC (ULVR.L): Unilever owns competing brands like Dove and Vaseline, offering a wide range of personal care products at various price points. Its global scale and strong R&D capabilities give it an advantage in product innovation and distribution. However, Unilever’s broad portfolio dilutes focus on the premium body care segment where Bath & Body Works excels.
• L’Occitane International S.A. (OREP.PA): L’Occitane emphasizes natural, sustainable ingredients, appealing to eco-conscious consumers—a growing segment where Bath & Body Works has less differentiation. Its premium positioning allows for higher margins, but its smaller store footprint and limited seasonal product variety compared to Bath & Body Works may restrict mass-market appeal.
• Target Corporation (TGT): Target’s private-label personal care brands (e.g., Good & Gather) compete on price and convenience, leveraging its vast retail network. While lacking Bath & Body Works’ brand cachet, Target’s affordability and one-stop-shop model attract budget-conscious shoppers, posing a threat in commoditized product categories.
• Walmart Inc. (WMT): Walmart’s scale enables aggressive pricing on body care and home fragrance products, pressuring specialty retailers like Bath & Body Works. Its strength lies in rural and suburban markets, but it lacks the curated, experiential retail environment that drives Bath & Body Works’ customer loyalty.
• Victoria’s Secret & Co. (LB): Formerly a sister company under L Brands, Victoria’s Secret competes in overlapping beauty and personal care categories. Its lingerie-focused brand limits direct competition, but its PINK line targets a similar demographic. Victoria’s Secret’s recent rebranding efforts could revive its appeal, potentially diverting spending from Bath & Body Works.