Bath & Body Works to Reinvigorate the Brand Via Consumers First Formula; Progress Underway

Under new leadership, Bath & Body Works is pursuing an extensive turnaround plan to restore customer engagement and elevate its brand intangible asset, the basis of our narrow-moat rating. Despite weak recent demand trends, Bath & Body Works has carved out a competitive edge in the sizable addressable markets in which it operates, evidenced by its leading market share position in bath and shower and candle air freshener industries, which has facilitated by BBW’s evolving response to consumer trends. Quantitatively, its moat is reinforced by a 35% average return on invested capital including goodwill that we expect the firm to generate over the next decade, well ahead of our 8% weighted average cost of capital estimate.