What Happened?

Shares of personal care and home fragrance retailer Bath & Body Works (NYSE: BBWI) fell 9.9% in the morning session after the company reported second-quarter results that missed profit expectations and provided a weaker-than-expected outlook for the third quarter. 

While the company's revenue of $1.55 billion met analyst estimates, its GAAP earnings per share of $0.30 fell 19.3% short of the $0.37 consensus. This also represented a significant drop from the $0.68 per share earned in the same quarter last year. The primary concern for investors, however, was the company's forecast for the upcoming third quarter. Bath and Body Works guided for earnings of $0.41 per share at the midpoint, which was below the consensus estimate of $0.49. This disappointing near-term outlook signaled to investors a potentially softer quarter ahead, overshadowing the in-line revenue performance.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Bath and Body Works? Access our full analysis report here, it’s free.

What Is The Market Telling Us

Bath and Body Works’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 10 days ago when the stock gained 3.4% on the news that the company announced the launch of a new Disney Villains-inspired fragrance collection, building on the success of its popular Disney Princess line. 

This new line, inspired by iconic characters like the Evil Queen and Maleficent, builds on the significant success of its previous Disney Princess collection. The launch is a key strategic move for the company, as it marks the first time a Disney-inspired collection will be released simultaneously in both domestic and international markets. This global rollout is designed to capitalize on Disney's powerful brand equity to boost sales and expand market share. The collaboration also signals a deepening, long-term relationship between the two brands, potentially unlocking future collections featuring other iconic characters. The Disney Villains collection will be available to loyalty members on August 26 and 27, with a full public launch on September 3.

Bath and Body Works is down 23.7% since the beginning of the year, and at $28.94 per share, it is trading 29.6% below its 52-week high of $41.08 from February 2025. Investors who bought $1,000 worth of Bath and Body Works’s shares 5 years ago would now be looking at an investment worth $975.40.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.