Bath & Body Works Stock Surged Despite Falling Sales—Here’s Why

Key Points

• Bath & Body Works stock rallied after earnings despite ongoing sales declines.
• BBWI’s Amazon partnership and omnichannel strategy are supporting investor optimism.
• The stock trades at a steep valuation discount while offering a 4.1% dividend yield.

Bath & Body Works Inc. NYSE: BBWI posted another quarter of declining sales in its Q1 2026 earnings report—and investors cheered anyway.

The cheers came courtesy of a double beat and the fact that the company maintained its full-year guidance. BBWI surged over 16% in early trading after the report, closing the day up about 10%. That price action came on about twice the stock’s normal volume.

Bath & Body Works earnings report was more of the same story that’s been viewed skeptically by investors.

That is, declining year-over-year revenue, particularly in same-store sales. But, as the post-earnings lift in BBWI seems to show, it's likely that the worst is already priced in.

Why Bath & Body Works Is Winning in the Marketplace

If investors want to be cautious about Bath & Body Works earnings report, here’s the data point to consider. In the quarter, the company generated 77% of its revenue from in-store sales in the United States and Canada. That includes buy-online-pick-up-in-store (BOPIS). Specifically, that meant $1.1 billion. However, the number was down 4.3% year over year.

The news was only slightly better regarding online sales. The company reported $246 million in revenue from that channel. That was “only” down about 1.5% year-over-year.

It’s important to understand how BOPIS figures into these channels. BOPIS represents about 20% of total online sales. However, these are recorded as store net sales.

BOPIS is core to the company’s "Win in the Marketplace" pillar—making Bath & Body Works accessible "anytime and anywhere." The fact that approximately 20% of digital demand is fulfilled in-store also drives store traffic, reduces shipping costs, and can prompt incremental in-store purchases.

Support for that thesis came when management normalized for a free shipping threshold change. During the quarter, Bath & Body Works lowered its minimum from $100 to $50—digital and store channels performed comparably, suggesting the underlying omnichannel strategy is gaining traction.

The Amazon Effect Makes the Rally Sustainable

The third bucket in which Bath & Body Works attributes revenue is labeled International and Other. The category only accounted for $70 million in revenue, but that was up 9% YOY. A big reason for that is the company’s new partnership with Amazon.com Inc. NASDAQ: AMZN that launched in February 2026.

Consumers can now order BBWI products on Amazon.com. Bath & Body Works records only the wholesale revenue (what Amazon pays them), not the full retail price the consumer pays. That's why CFO Boratto noted they "do not record full retail sales as revenue." This is the same accounting model the company would use selling into a retailer like Ulta Beauty NASDAQ: ULTA or Target NYSE: TGT—it's a distribution play, not a digital one, and it won't show up in the company's direct channel figures.

That said, the company is citing strong week-over-week sales from Amazon. How big could it get? Here’s where investors should be patient.

On the earnings call, management noted that expanded distribution (of which Amazon is one part) is expected to contribute about $50 million within its full-year 2026 revenue outlook. That’s a fraction of the forecasted $7.3 billion in full-year revenue. CEO Daniel Heaf described the Amazon launch as still in the early days but expects it to have a "meaningful financial impact" as the channel ramps, leaving room for upward estimate revisions if momentum builds.

Has BBWI Reversed Course?

The post-earnings rally has pushed BBWI near its consensus price target of $21.21. But even if the stock were to reach the consensus price target, it would still be trading in the middle of its 52-week range, which could signal more upside.

What could be notable is that the rally arrested the drop in BBWI and took the 52-week low made in November 2025 off the table. In that case, investors may find it constructive to start building, or adding to, a position.

Investors See Value in BBWI

If investors now believe the worst is over for Bath & Body Works, it means they could start to focus on valuation. That’s where BBWI makes a strong case. The stock is trading for around 6x forward earnings. That’s a significant discount to the S&P 500, the broad retail and secondary retail averages, and the company’s own historical average.

Plus, Bath & Body Works pays an attractive, stable dividend with a yield of 4.1%. That’s well above the rate of inflation, even if it remains persistent or even inches higher.