Bath & Body Works, Inc. 10-K Analysis & Summary – 3/14/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Bath & Body Works, Inc.

10-K

Annual report

Filing date:

03/14/2025

TLDR:

ELI5:

Bath & Body Works made a little less money this year, but they’re still doing pretty well. They’re trying to grow by coming up with new products and selling in more countries.

Accession #:

0000701985-25-000011

Published on

March 16, 2025

Analyst Summary

Net sales decreased by 1.6% to $7.307 billion, primarily due to the 53rd week in fiscal 2023 and a decline in wholesale shipments to franchise partners.
Gross profit decreased slightly, but the gross profit rate increased to 44.3% due to improved merchandise margins.
Operating income decreased by 1% to $1.266 billion, with the operating income rate remaining flat at 17.3%.
Sales per average selling square foot decreased to $1,041 from $1,074.
Sales per average store decreased to $2.951 million from $3.015 million.
The debt leverage ratio decreased from 2.8 to 2.5, indicating improved financial health.
Free cash flow remained relatively stable at $660 million.
Gross Profit Margin increased from 43.56% to 44.26%.
Operating Profit Margin remained relatively stable at 17.3%.
Net Profit Margin decreased from 11.82% to 10.92%.
Return on Assets (ROA) increased slightly from 16.07% to 16.38%.
Return on Equity (ROE) is negative and decreased from -53.96% to -57.69%.
EPS (Basic) decreased from $3.86 to $3.62.
EPS (Diluted) decreased from $3.84 to $3.61.
Current Ratio decreased from 1.64 to 1.48.
Quick Ratio decreased from 1.09 to 0.88.
Cash Ratio decreased from 0.84 to 0.55.
Debt-to-Equity Ratio is negative and increased from -2.70 to -2.81.
Debt-to-Assets Ratio decreased slightly from 0.803 to 0.797.
Interest Coverage Ratio increased from 3.72 to 4.06.
Inventory Turnover decreased from 5.9 to 5.6.
Days Sales Outstanding (DSO) decreased from 11.0 to 10.3.
Days Payable Outstanding (DPO) decreased from 33.1 to 30.4.
Asset Turnover increased from 1.36 to 1.50.
Price-to-Earnings Ratio (P/E) is 8.17, below the industry average.
Price-to-Book Ratio (P/B) is negative and not comparable to the industry average.
Price-to-Sales Ratio (P/S) is 0.41, below the industry average.
Enterprise Value to EBITDA (EV/EBITDA) is 7.95, below the industry average.
Revenue Growth decreased by 1.64%.
Net Income Growth decreased by 9.11%.
EPS Growth decreased by 6.00%.

SEC Filing Report: Bath & Body Works, Inc. (10-K)

Executive Summary

This report analyzes Bath & Body Works, Inc.’s 10-K filing for the fiscal year ended February 1, 2025. The company experienced a slight decrease in net sales, but maintained a strong operating income rate. Key strategic priorities include accelerating top-line growth, enhancing operational excellence, and strengthening the financial position. The company is focused on product innovation, marketing, and technology, while also extending its reach through adjacencies and international expansion. While the company appears financially stable, investors should monitor risks related to economic conditions, competition, and supply chain disruptions. Overall, a hold rating is suggested, pending further observation of the company’s ability to execute its growth strategies in a challenging macroeconomic environment.

Company Overview

Bath & Body Works, Inc. is a global leader in personal care and home fragrance. The company operates through company-operated stores and e-commerce sites in the U.S. and Canada, as well as through franchise, license, and wholesale arrangements internationally. The company’s strategic priorities are focused on top-line growth, operational efficiency, and disciplined capital allocation.

Detailed Analysis

Financial Statement Analysis

Key financial data and ratios are presented below:

Net Sales

Net Sales decreased by 1.6% to $7.307 billion in 2024, primarily due to the 53rd week in fiscal 2023 and a decline in wholesale shipments to franchise partners. Stores Net Sales increased slightly due to new store growth and increased BOPIS orders.

Gross Profit

Gross Profit decreased slightly to $3.234 billion, but the Gross Profit rate increased to 44.3% from 43.6% due to improved merchandise margins.

Operating Income

Operating Income decreased by 1% to $1.266 billion, with the operating income rate remaining flat at 17.3%.

Key Ratios

Sales per Average Selling Square Foot: $1,041 (down from $1,074)
Sales per Average Store: $2.951 million (down from $3.015 million)

Debt Leverage Ratio

The debt leverage ratio decreased from 2.8 to 2.5, indicating improved financial health.

Free Cash Flow

Free cash flow remained relatively stable at $660 million.

Visual Aids

Net Sales (in billions)

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Financial Analysis of Bath & Body Works, Inc. (BBWI)

1. Commentary

BBWI’s financial performance in 2024 shows a slight decline in net sales compared to 2023, driven by decreases in Direct and International sales, partially offset by growth in US and Canada store sales. While net income decreased, adjusted net income remained relatively stable. The company continued its share repurchase program and dividend payments, reflecting a commitment to returning value to shareholders. Long-term debt decreased, but the company’s leverage ratio remains elevated.

2. Financial Ratio and Metric Analysis

Profitability

Ratio/Metric	2024	2023	Change (%)	Industry Comparison
Gross Profit Margin	44.26%	43.56%	1.61%	Industry Average: 40-50% (BBWI is within range)
Operating Profit Margin	17.33%	17.29%	0.23%	Industry Average: 10-20% (BBWI is within range)
Net Profit Margin	10.92%	11.82%	-7.62%	Industry Average: 5-15% (BBWI is within range)
Return on Assets (ROA)	16.38%	16.07%	1.93%	Industry Average: 5-10% (BBWI is above average)
Return on Equity (ROE)	-57.69%	-53.96%	7.10%	Industry Average: 10-20% (BBWI is below average due to negative equity)
EPS (Basic)	$3.62	$3.86	-6.22%	N/A
EPS (Diluted)	$3.61	$3.84	-6.00%	N/A

Liquidity

Ratio/Metric	2024	2023	Change (%)	Industry Comparison
Current Ratio	1.48	1.64	-9.76%	Industry Average: 1.5-2.0 (BBWI is slightly below average)
Quick Ratio	0.88	1.09	-19.27%	Industry Average: 0.8-1.0 (BBWI is within range)
Cash Ratio	0.55	0.84	-34.52%	Industry Average: 0.2-0.4 (BBWI is above average)

Solvency/Leverage

Ratio/Metric	2024	2023	Change (%)	Industry Comparison
Debt-to-Equity Ratio	-2.81	-2.70	4.07%	Industry Average: 0.5-1.5 (BBWI is not comparable due to negative equity)
Debt-to-Assets Ratio	0.797	0.803	-0.75%	Industry Average: 0.3-0.6 (BBWI is above average)
Interest Coverage Ratio	4.06	3.72	9.14%	Industry Average: 5-10 (BBWI is below average)

Activity/Efficiency

Ratio/Metric	2024	2023	Change (%)	Industry Comparison
Inventory Turnover	5.6	5.9	-5.08%	Industry Average: 4-6 (BBWI is within range)
Days Sales Outstanding (DSO)	10.3	11.0	-6.36%	Industry Average: 10-20 (BBWI is within range)
Days Payable Outstanding (DPO)	30.4	33.1	-8.16%	Industry Average: 30-50 (BBWI is within range)
Asset Turnover	1.50	1.36	10.29%	Industry Average: 1.0-1.5 (BBWI is within range)

Valuation

Ratio/Metric	2024	Industry Comparison
Price-to-Earnings Ratio (P/E)	8.17	Industry Average: 15-25 (BBWI is below average)
Price-to-Book Ratio (P/B)	Negative	Industry Average: 2-4 (BBWI is not comparable due to negative book value)
Price-to-Sales Ratio (P/S)	0.41	Industry Average: 1-2 (BBWI is below average)
Enterprise Value to EBITDA (EV/EBITDA)	7.95	Industry Average: 10-15 (BBWI is below average)

Growth Rates

Ratio/Metric	2024	2023	Change (%)
Revenue Growth	$7,307	$7,429	-1.64%
Net Income Growth	$798	$878	-9.11%
EPS Growth	$3.61	$3.84	-6.00%

Other Relevant Metrics

Sales per Average Selling Square Foot: Decreased from $1,074 in 2023 to $1,041 in 2024, a decrease of 3%.
Sales per Average Store: Decreased from $3,015 thousand in 2023 to $2,951 thousand in 2024, a decrease of 2%.
Adjusted Net Income: A non-GAAP measure, decreased slightly from $747 million in 2023 to $729 million in 2024. This metric excludes certain gains and losses, providing a view of core operational profitability.
Free Cash Flow: Increased slightly from $656 million in 2023 to $660 million in 2024.