Bath & Body Works has now reported Q2 results, and the picture that emerges is one of continuing pressure on the stock despite a meaningful unwind in short positioning.
The most notable shift since this morning's earnings preview is in short interest itself. Shorts have covered aggressively — short interest dropped 13.6% in a single session on August 25, bringing it down to 7.4% of the free float from a peak near 8.5%. Over the week, the position fell roughly 7.4%. That is a meaningful retreat from the elevated levels noted ahead of the print, though at 15.1 million shares still short, bears have not abandoned the trade entirely. The borrow market confirms there is no squeeze dynamic at work here: availability has actually expanded sharply, climbing to over 2,000% of short interest — up from roughly 500% just a few sessions ago when positioning was at its most stretched. Cost to borrow ticked up to 0.51%, a one-month high in percentage terms, but remains squarely in the "easy borrow" category. The ORTEX short score eased to 43.5, down from a peak of 54.9 on August 21, consistent with the short-covering narrative.
Options positioning sends a different signal entirely. The put/call ratio fell further to 0.69 — more than two standard deviations below its 20-day average of 0.76 — making this the most call-skewed reading in months. That divergence between a still-elevated short book and call-heavy options activity has only sharpened post-earnings. Either options traders are positioned for a relief bounce, or they were caught offside by a print that failed to deliver one. The stock closed at $17.58 on August 25, down 8.3% on the day and 12.3% on the week, suggesting the latter interpretation has more weight right now.
The Street's reaction is mixed, though the direction of recent moves leaned constructive just before the print. JP Morgan's Matthew Boss raised his target to $24 on August 18 while holding a Neutral rating. Citigroup upgraded to Buy the same day, keeping a $25 target. Both of those moves came before the quarterly numbers landed, and the mean analyst target of $25.43 now implies roughly 45% upside from current levels — a gap that reflects genuine disagreement rather than consensus conviction. Goldman Sachs had already moved in the opposite direction in early July, downgrading to Sell with a $19 target, which now looks closer to where the market is trading. The factor score for analyst recommendation dispersion ranks in the 94th percentile — one of the widest spreads in the universe — capturing exactly this bull-versus-bear standoff. EPS momentum scores rank in the bottom third, and the forward earnings yield multiple has been compressing over 30 days.
One piece of structural context worth noting: a cluster of directors bought stock at prices between $14.86 and $15.58 in November 2025, a level not far below where the stock closed this week. Those purchases, by the independent chairman, two directors, and others, totalled over $900,000 collectively. That support zone is now back in focus. Among correlated peers, the picture is broadly weak: WSM fell 2.8% on the week, BOBS dropped 5.9%, and FND lost 3.1%, suggesting the pressure on BBWI is not entirely idiosyncratic — but the magnitude of the stock's move still outpaces the peer basket.
What to watch next is how short interest trends over the coming sessions: whether the August 25 covering marks the beginning of a sustained unwind or merely tactical de-risking around the print, with bears ready to reload closer to the November earnings date.
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