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BBWI, Bath & Body Works

Specialty Retail retail Revenue in runoff

Bath & Body Works is a global leader in personal care and home fragrance, driven by the belief that everybody deserves to feel good.

For over 35 years, the brand's beloved and iconic scents have been expertly crafted for exceptional performance and a luxury fragrance experience.

Formulated with thoughtfully chosen ingredients, Bath & Body Works' body care products are available in multiple forms including fine fragrance mist, body cream, lotion, eau de parfum, body wash, hand soap, sanitizer and more, and home to our famous 3-wick candles.

Latest annual: FY2026 10-K

BBWI · Bath & Body Works

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2026

$7.3B

−0.2% YoY · 3% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $7.2B 5-yr avg $7.5B

Gross margin 43% 5-yr avg 45%

Operating margin 15.8% 5-yr avg 18.8%

ROIC 48% 5-yr avg 72%

Owner-earnings margin 13% 5-yr avg 11%

Free cash flow margin 13% 5-yr avg 11%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

Situation: Revenue in runoff. Revenue has shrunk about 7% a year across the record while operations still generate cash.
What moves the needle: Gross margin has run about 44% and operating margin about 17% through the cycle, a solid spread between what it charges and what the product costs to make. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has run high across the record (median 56%, above 15% in 8 of 8 years), though buybacks and expensed R&D and brands shrink the capital base, so the figure overstates the underlying economics. The steadier read is owner earnings: roughly 11% of revenue reaches owners as cash, consistently. Whether these returns reflect real pricing power or an accounting artifact is the judgment the 10-K is for.

Every line is arithmetic on the company's filings, shown in full in the sections below.

The record

Ten years of arithmetic, read across the cycle.

The record, 2018–2026

realized figures from each filing · older years to the left

2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	2026’26	TTMTTMMay 2026
										Income statement
$12.6B	$13.2B	$5.4B	$6.4B	$7.9B	$7.6B	$7.4B	$7.3B	$7.3B	$7.2B	RevenueRevenue
39%	37%	44%	48%	49%	43%	44%	44%	44%	43%	Gross marginGross mgn
26%	27%	25%	23%	23%	25%	26%	27%	28%	27%	SG&A / revenueSG&A/rev
$1.7B	$1.2B	$1.0B	$1.6B	$2.0B	$1.4B	$1.3B	$1.3B	$1.1B	$1.1B	Operating incomeOp. inc.
13.7%	9.3%	19.2%	24.9%	25.5%	18.2%	17.3%	17.3%	15.4%	15.8%	Operating marginOp. mgn
$983M	$644M	($366M)	$844M	$1.3B	$800M	$878M	$798M	$649M	$727M	Net incomeNet inc.
25%	25%	—	23%	21%	24%	14%	22%	26%	19%	Effective tax rateTax rate
										Cash flow & returns
$1.4B	$1.4B	$1.2B	$2.0B	$1.5B	$1.1B	$954M	$886M	$1.1B	$1.2B	Operating cash flowOp. cash
$524M	$547M	$588M	$521M	$363M	$221M	$269M	$282M	$254M	$251M	DepreciationDeprec.
($203M)	$89M	$927M	$624M	($250M)	$85M	($236M)	($234M)	$168M	$151M	Working capital & otherWC & other
$707M	$629M	$458M	$228M	$270M	$328M	$298M	$226M	$237M	$249M	CapexCapex
5.6%	4.8%	8.5%	3.5%	3.4%	4.3%	4.0%	3.1%	3.3%	3.4%	Capex / revenueCapex/rev
$699M	$748M	$778M	$1.8B	$1.2B	$816M	$656M	$660M	$865M	$909M	Owner earningsOwner earn.
5.5%	5.7%	14.4%	28.1%	15.5%	10.8%	8.8%	9.0%	11.9%	12.5%	Owner earnings marginOE mgn
$699M	$748M	$778M	$1.8B	$1.2B	$816M	$656M	$660M	$865M	$909M	Free cash flowFCF
5.5%	5.7%	14.4%	28.1%	15.5%	10.8%	8.8%	9.0%	11.9%	12.5%	Free cash flow marginFCF mgn
$0	$0	—	—	—	—	—	—	—	$0	AcquisitionsAcquis.
$686M	$666M	$332M	$83M	$120M	$186M	$182M	$177M	$167M	$164M	Dividends paidDiv. paid
$446M	$198M	$0	$0	$2.0B	$1.3B	$148M	$401M	$401M	—	BuybacksBuybacks
37%	26%	—	58%	117%	74%	66%	54%	50%	48%	ROICROIC
										Balance sheet
$1.5B	$1.4B	$1.5B	$3.6B	$2.0B	$1.2B	$1.1B	$674M	$953M	$870M	Cash & investmentsCash+inv
$310M	$367M	$306M	$148M	$240M	$226M	$224M	$205M	$180M	$98M	ReceivablesReceiv.
$1.2B	$1.2B	$1.3B	$572M	$709M	$709M	$710M	$734M	$699M	$782M	InventoryInvent.
$717M	$711M	$647M	$345M	$435M	$455M	$380M	$338M	$465M	$557M	Accounts payablePayables
$833M	$904M	$946M	$375M	$514M	$480M	$554M	$601M	$414M	$323M	Operating working capitalOper. WC
$3.3B	$3.3B	$3.2B	$5.6B	$3.0B	$2.3B	$2.1B	$1.8B	$2.0B	$1.9B	Current assetsCur. assets
$2.0B	$2.0B	$2.4B	$2.8B	$1.3B	$1.4B	$1.3B	$1.2B	$1.6B	$1.4B	Current liabilitiesCur. liab.
1.6×	1.6×	1.4×	2.0×	2.3×	1.6×	1.6×	1.5×	1.3×	1.4×	Current ratioCurr. ratio
$1.3B	$1.3B	$628M	$628M	$628M	$628M	$628M	$628M	$628M	$628M	GoodwillGoodwill
$8.1B	$8.1B	$10.1B	$11.6B	$6.0B	$5.5B	$5.5B	$4.9B	$5.1B	$5.0B	Total assetsAssets
$5.8B	$5.8B	$5.5B	$6.4B	$4.9B	$4.9B	$4.4B	$3.9B	$3.9B	$3.9B	Total debtDebt
$4.3B	$4.4B	$4.0B	$2.8B	$2.9B	$3.6B	$3.3B	$3.2B	$2.9B	$3.0B	Net debt / (cash)Net debt
4.3×	3.2×	2.8×	3.7×	5.2×	4.0×	3.7×	4.1×	4.1×	4.2×	Interest coverageInt. cov.
($753M)	($869M)	($1.5B)	($662M)	($1.5B)	($2.2B)	($1.6B)	($1.4B)	($1.3B)	($1.1B)	Shareholders’ equityEquity
0.8%	0.7%	1.6%	0.8%	0.6%	0.5%	0.6%	0.5%	0.4%	0.4%	Stock comp / revenueSBC/rev
										Per share
287M	279M	278M	281M	273M	233M	229M	221M	209M	202M	Shares out (diluted)Shares
$44.01	$47.44	$19.44	$22.90	$28.87	$32.45	$32.44	$33.06	$34.89	$35.87	Revenue / shareRev/sh
$3.43	$2.31	$-1.32	$3.00	$4.88	$3.43	$3.83	$3.61	$3.11	$3.60	EPS (diluted)EPS
$2.44	$2.68	$2.80	$6.44	$4.48	$3.50	$2.86	$2.99	$4.14	$4.50	Owner earnings / shareOE/sh
$2.44	$2.68	$2.80	$6.44	$4.48	$3.50	$2.86	$2.99	$4.14	$4.50	Free cash flow / shareFCF/sh
$2.39	$2.39	$1.19	$0.30	$0.44	$0.80	$0.79	$0.80	$0.80	$0.81	Dividends / shareDiv/sh
$2.46	$2.25	$1.65	$0.81	$0.99	$1.41	$1.30	$1.02	$1.13	$1.23	Cap. spending / shareCapex/sh
$-2.62	$-3.11	$-5.39	$-2.36	$-5.56	$-9.47	$-7.10	$-6.27	$-6.13	$-5.61	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	8-yr	5-yr
Revenue / share	−2.9%/yr	+8.8%/yr
Owner earnings / share	+6.9%/yr	−8.5%/yr
EPS	−1.2%/yr	+0.7%/yr
Dividends / share	−12.8%/yr	+22.0%/yr
Capital spending / share	−9.2%/yr	+6.9%/yr

The record, charted

FY2018–2026

Each measure over its full record; the current point and the worst year marked.

Share count

209Mpeak FY2018

ROIC

50%low FY2019

Gross margin

44%low FY2019

Net debt ÷ owner earnings

3.4×peak FY2018

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$865Mowner earningsvs.$649Mnet incomelow FY2024

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2018FY2026

Owner-earnings bridge

FY2022–FY2026cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2026 the business turned $649M of profit into $865M of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

Reported net income$649M

Owner earnings$865M · 12% of revenue

	FY2026	FY2025	FY2024	FY2023	FY2022
Reported net income	$649M	$798M	$878M	$800M	$1.3B
Depreciation & amortizationnon-cash charge added back	+$254M	+$282M	+$269M	+$221M	+$363M
Stock-based compensationreal costnon-cash, but a real cost	+$31M	+$40M	+$43M	+$38M	+$46M
Working capital & othertiming of cash in and out, other non-cash items	+$168M	−$234M	−$236M	+$85M	−$250M
Cash from operations	$1.1B	$886M	$954M	$1.1B	$1.5B
Capital expenditurecash put back in to keep running and to grow	−$237M	−$226M	−$298M	−$328M	−$270M
Owner earnings	$865M	$660M	$656M	$816M	$1.2B
Owner-earnings marginowner earnings ÷ revenue	12%	9%	9%	11%	16%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $31M), owner earnings is nearer $834M.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2026 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 4.1×

Adequate

Operating income $1.1B ÷ interest expense $276M

What this means
Comfortable in a normal year, but below the margin of safety Graham looked for. Worth checking how stable the coverage has been across a full cycle.
How heavy is the debt, net of cash? $2.9B · 2.6× operating profit

Meaningful net debt

Cash $953M − debt $3.9B

What this means
Netting $953M of cash and short-term investments against $3.9B of debt leaves $2.9B owed, about 2.6× a year's operating profit (3.5× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 30d

Tight

DSO 9 + DIO 62 − DPO 41 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital 54%

Very high (≥25%) through the cycle

8-yr median, range 26%–117%; 50% latest = NOPAT $829M ÷ invested capital $1.7B

Industry peers: median 14%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 8 years (it ran 50% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 11%

Solid through the cycle

9-yr median margin, range 6%–28%; latest $865M = operating cash $1.1B − maintenance capex $237M

Industry peers: median 5%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 12% of revenue this year, a 11% median across 9 years. Treating stock comp as the real expense it is (less $31M of SBC) leaves $834M.
Are earnings backed by cash? 1.70×

Cash-backed

Cash from ops $1.1B ÷ net income $649M

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 66%

Returns about half

Dividends + buybacks $568M ÷ Owner Earnings $865M

What this means
Of $865M Owner Earnings, $568M (66%) went back to shareholders, $167M dividends, $401M buybacks. Net of $31M stock comp, the real buyback was about $370M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 0.93×

Maintaining

Capex $237M ÷ depreciation $254M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 3 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $7.3B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 1.27×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $3.9B vs $428M WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Near

A profit every year (9-yr record) · 1 loss year

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Pass

Uninterrupted dividends · paid every year (9)

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +84%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $3.84/share (latest year $3.22), the averaged base the calculator's gate runs on, and book value is $-6.36/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2018–2026

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 8 of 9

What this means
Lost money in 1 year(s), look at what happened there before trusting the average.
Return on capital ≥ 15% 9 of 9 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 14% → 17% (3-yr avg ends)

What this means
Through the cycle the operating margin widened — about 14% early to 17% lately, median 17% — pricing power intact or improving.
Reinvestment, incremental ROIC returns capital

What this means
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
Owner earnings growth +1%/yr

What this means
Owner earnings grew about 1% a year over the record.
Worst year 2019 · 9.3% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −3.9%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.
Dividend record paid

What this means
Paid a dividend in 9 of the years on record.

Does AI threaten the moat?

Moderate contestability

AI is likely to reshape costs and some products here without clearly contesting or sparing the core moat; how the company itself frames it is the tell.

In its own filing Raised, but not as a competitor

The filing raises AI among its risks, but in other terms (security, regulation, energy or the like), not as a competitor to its product.

The question is whether a moat the record shows as durable outlasts a technology that lowers the cost of part of what the firm sells. The durability is read in the record above, the filing's own framing of AI beside it; the industry label decides nothing on its own.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, May 2, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$1.9B

Cash & short-term investments$870M
Receivables$98M
Inventory$782M
Other current assets$149M

Current liabilities$1.4B

Accounts payable$557M
Other current liabilities$820M

Current ratio1.38×all current assets ÷ what's due · Graham looked for 2×

Quick ratio0.81×stricter: inventory excluded

Cash ratio0.63×strictest: cash alone against what's due

Working capital$522Mthe cushion left after near-term bills

Revenue, latest quarter vs. a year ago−3.2%the freshest read on whether the business is still growing

Current ratio, recent quarters1.1× → 1.4×

Deeper floors

Tangible book value($2.2B)equity stripped of goodwill & intangibles

Debt incl. operating leases$4.7B$1.1B of it operating leases; with finance leases, “total fixed claims” below reaches $5.0B (annual-report basis)

Deferred revenue$223Mcustomer cash collected before delivery; operating float

From the company's latest filing.

Debt maturity

the debt note, SEC EDGAR →

Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.

'26$284M

'27$0

'28$444M

'29$482M

'30$844M

later$1.9B

Bars scaled to the largest single year; “later” is everything due after 2030, shown apart since it dwarfs the years.

Due in the next 12 months$284Mthe first rung: what must be repaid or rolled over within the year

Within two years$284Mthe near wall, the part most exposed to today’s credit conditions

Biggest single year$844Min 2030the lumpiest maturity, where a refinancing, if needed, is largest

Total scheduled principal$3.9Bevery year plus what lies beyond, as the footnote totals it

Against what the business has and earns

Cash & short-term investments, May 2, 2026$870M

One year of owner earnings (FY2026)$865M

Together, against $284M due next year6.1×

Cash on hand as of May 2, 2026 plus a year’s owner earnings comes to $1.7B against the $284M due in the twelve months after the Jan 31, 2026 schedule: 6.1 times it.

Maturity schedule extracted from the company’s Jan 31, 2026 annual report and reconciled to the balance-sheet debt.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, and what it adds to the debt on the page above.

'26$250M

'27$228M

'28$191M

'29$158M

'30$126M

later$317M

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$250Ma fixed cash payment, owed whether or not the business has a good year

Total lease payments$1.3Bevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$1.1Bthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$3.9B

Lease obligations (present value)$1.1B

Total fixed claims on the business$5.0B

Counting the leases the way Buffett does, the fixed claims on this business come to $5.0B, of which the leases are 21%. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Jan 31, 2026 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

How the cash was used, 2018–2026

Over the record, the business generated $11.6B of operating cash; how management split it reads as a cash returner, paying most of what it earns straight back to owners.

Reinvested$3.4B · 29%
Dividends$2.6B · 22%
Buybacks$4.9B · 42%
Retained (debt / cash)$786M · 7%

Returned to owners$7.5B
90% of the owner earnings the business produced over the span, $2.6B as dividends and $4.9B as buybacks.
Source of fundingOperating cash
Operating cash covered reinvestment and returns; over the span debt fell $1.9B and cash and short-term investments fell $645M.
Average price paid for buybacks$60.63
Across the years where the filing reports a share count, 43M shares were bought for $2.6B, about $60.63 each. Year to year the price paid ranged from $36.81 (2019) to $69.57 (2022), and 2022, near the top of that range, was also its heaviest buyback year ($2.0B).
Net change in share count−29.6%
The diluted count fell from 287M to 202M, so the buybacks outran the stock issued to staff.
Dividend record$0.80/sh
Paid in 9 of the years on record, the per-share dividend shrinking about 13% a year. It was cut at least once along the way.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 9-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$1.0B20% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity—goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$0over 9 years buying other businesses, against $3.4B of capital spent building

$720M written down across 1 year (2020): goodwill the company has already conceded it overpaid for, charged against earnings. A write-down costs no cash (the cash went out when the deal was signed), but it is management marking its own past judgment to market.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 9-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid.

Insider ownership<1%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio780:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$31M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 3% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Bath & Body Works is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2018–2026.

None of the 6 tests turned up a mark; each came back clean. A clean panel says only that these particular ways of being wrong are not written into the record.

Each test came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did debt outgrow the business?
Did reported profit become cash?
Did receivables and inventory outpace sales?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2026

read the 10-K →

Does management own its misses?
2 plain admissions in this year's filing
“Our 2025 performance did not meet our expectations.”verify →
Which reported numbers are a judgment call?
Management names Revenue recognition, Income taxes, Inventory as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Specialty Retail

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
ULTAUlta Beauty Inc.	$12.4B	38%	13.4%	48%	10%
NSITInsight Enterprises	$8.2B	15%	3.4%	13%	2%
BBWIBath & Body Works	$7.3B	44%	17.3%	56%	11%
SIGSignet Jewelers	$6.8B	38%	6.7%	15%	8%
WOOFPetco Health and Wellness	$6.0B	40%	2.5%	4%	2%
SBHSally Beauty Holdings	$3.7B	50%	9.8%	20%	5%
TITNTitan Machinery Inc.	$2.4B	18%	1.9%	7%	5%
SGUStar Group L.P.	$1.8B	62%	4.1%	—	4%
Group median	—	39%	5.4%	15%	5%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Bath & Body Works has delivered.

Today’s price $

Through the cycle, Bath & Body Works earns about $787M on its 10.8% median owner-earnings margin. This year’s 11.9% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($787M) Net of stock comp (−$29M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’22→’26−7%/yr

Owner-earnings growth · ’18→’26+1%/yr

Owner-earnings yield—

P/E (3-yr earnings ’24–’26)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Owner earnings $909M on 202M shares outstanding, per the 10-Q cover, as of 2026-05-22; net debt $3.0B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh BBWI against another business →

Cite: Owner Scorecard, "Bath & Body Works (BBWI), the owner's record," https://ownerscorecard.com/c/BBWI, data as of 2026-07-09.

Manual order: ← BBW its page in the Manual BBY →

Industry order: ← BBW the Specialty Retail chapter BBY →