Story Hinges on 2H26 Innovation; Assume Coverage with Neutral

研报英文原文证据摘录

Story Hinges on 2H26 Innovation; Assume Coverage with Neutral

ave a view; Shares Out (mil) 215.0

we are seeing a step-up in flash sales this Spring— the # of offers in 1Q26 was up Market Cap. (mil) US$3,859.3

sequentially, which continues so far in May. Avg Daily Vol (000) 5,963

Div (ann) US$0.80

Div Yield 4.46%

• Opportunities for the remainder of '26. After 1Q26, BBWI is lapping easier Fiscal Year End Jan

comparisons for the rest of the year (the 1-year stack gets 3-points easier in 2H26,

on average, vs. 1H26). This 2Q26, May is lapping the easiest monthly compare (soft Price Performance - 1 Year

Mother's Day with weak Body care LY), while in 3Q25, all key categories declined, USD

with the Villains collab missing plan (challenging start to holiday called out in October); 35

4Q25 improved as the quarter went on but was still negative. The company has been

successful at driving spend and repeat purchases from existing consumers but less so 30

from new customer acquisition--we like the idea of brand presence on Amazon, although 25

it's not clear yet if BBWI is getting an incremental consumer/wouldn't cannibalize its core

business (pricing architecture is higher on Amazon, which we question). 20

• What's the right valuation? BBWI sales have stayed in the negative LSD/MSD range

since '21, with EBIT margins resetting from high teens/low 20's to 13% implied in the '26 May-2510 Jul-25 Sep-25 Nov-25 Jan-26 Mar-26 May-26

guide. We think the multiple could remain constrained until there's a return to consistent

Source: Bloomberg

sales growth as the validation of the turnaround working--$600M in free cash flow (15%

yield) and 4% dividend yield should help provide downside support.

RISKS TO ACHIEVEMENT OF PT & RECOMMENDATION

Competition, Inflation, promotional strategies