Bath & Body Works

None of the warning signs we check for were found.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 12 Mar 2026, plus the 10-Q filed 26 Aug 2026 and 5 later 8-Ks.

• It owes more than it owns on paper (negative equity). Often that's from borrowing to buy back shares.

Whether the price already reflects the risks is what the deep dive is for.

• Changes in laws, regulations, standards, technology platform rules or other requirements relating to privacy, cybersecurity and AI, or any actual or perceived failure by us to comply with such laws, regulations, rules or contractual or other obligations relating to data privacy, cybersecurity and AI, could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.

  Could happen

  Use of emerging and new technologies, including AI, could also expose us to liability or actual or alleged violations of applicable laws, rules and regulations, including third-party claims of intellectual property infringement, misappropriations or other violations, as it is possible that our employees using such tools for development purposes may overly rely on results generated via these tools and may not conduct sufficient checks, verifications or investigations of pre-existing design or other intellectual property rights with respect to the outputs generated by these tools. Further, we may jeopardize our own intellectual property rights via over-zealous use of such new technologies by, for example, inputting our proprietary materials into a tool that collects data for further development or provision of its services to third parties. Similarly, intellectual property ownership and license rights surrounding AI has not been fully addressed by international and U.S. courts or the laws, rules or regulations of U.S. and foreign jurisdictions. Any materials created by us using AI may not be subject to intellectual property protection, which may affect our ability to commercialize such materials. While we do monitor and provide guidance to our employees on the use of AI in our business operations and development, risk to our intellectual property rights is hard to completely mitigate as employees may not follow proper internal processes or such tools' service providers may utilize data and materials included in their tools in ways contrary to what they claim.

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• We cannot guarantee the successful implementation of our strategic transformation.

  Could happen

  We launched a multi-year “Consumer First Formula” strategic transformation in the third quarter of 2025, as outlined in item I – “ Business – Strategy ”. Our ability to successfully execute this transformation is subject to various risks and uncertainties, such as our ability to successfully execute our plan, changes in consumer demands and trends, general economic conditions, and other risks. Achievement of sustainable growth may require significant investment and, therefore, may be dilutive to our earnings in the short term. In addition, at times the attention of our senior management team may be focused on the Consumer First Formula and be diverted from day-to-day business operations, which may disrupt our business. There can be no guarantee regarding the timing of or extent to which we will realize the anticipated benefits of these investments and other costs, if at all, and these factors could have a material adverse effect on our results of operations, financial condition and cash flows.

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• Changes in laws, regulations, standards, technology platform rules or other requirements relating to privacy, cybersecurity and AI, or any actual or perceived failure by us to comply with such laws, regulations, rules or contractual or other obligations relating to data privacy, cybersecurity and AI, could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.

  Could happen

  AI regulation is nascent but rapidly evolving. Several U.S. states have adopted, or are considering, AI specific or adjacent laws addressing issues such as high-risk AI uses, bias and discrimination, algorithmic decision making, pricing practices, and transparency. For example, Colorado has enacted a comprehensive, risk-based AI law that will require governance programs, risk and impact assessments, disclosures, and human-oversight mechanisms for certain uses of AI. Other states, including California, New York, Texas, and Utah, have adopted or proposed a range of targeted laws addressing aspects of AI and automated decision making, including transparency, consumer disclosures, pricing practices, and the use of AI in connection with personal information. Similar to the evolving privacy law landscape, this patchwork of existing and anticipated AI laws could increase regulatory complexity, elevate legal and compliance risk, and require additional investment of resources as our use of AI continues to grow.

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• We may be impacted by the ability to adequately source, distribute and sell merchandise and other materials on a global basis.

  On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Power Act (the “IEEPA Decision”). There remains significant uncertainty regarding the implementation of the IEEPA Decision, including the process that will govern refund claims, the timing of any potential refunds, and the ultimate amounts, if any, that we recover. In addition, immediately following the IEEPA Decision, the U.S. government initiated new tariffs under alternative authorities, resulting in continued tariff exposure.

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• We announce material financial and operational information using our investor relations website, press releases, SEC filings and public…

  Could happen

  We announce material financial and operational information using our investor relations website, press releases, SEC filings and public conference calls and webcasts. Information about the Company, our business and our results of operations may also be announced by posts on our accounts on social media channels, including the following: Facebook, Instagram, X, LinkedIn, Pinterest, TikTok and YouTube. The information contained on, or that can be accessed through, our social media channels and our website is deemed not to be incorporated in this Annual Report on Form 10-K or to be a part of this Annual Report on Form 10-K. The information that we post through these social media channels and on our website may be deemed material. As a result, we encourage investors, the media and others interested in the Company to monitor these social media channels in addition to following our investor relations website, press releases, SEC filings and public conference calls and webcasts. The list of social media channels we use may be updated from time to time on our investor relations website.

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