How Graphene Investments' Exit From Bath & Body Works Offers an Important Bath Tip for Investors

Major fund Graphene Investments has completely exited its Bath & Body Works position, divesting 114,700 shares valued at approximately $2.95 million. This decisive move signals a critical turning point—when sophisticated investors flee entirely rather than trim positions, it’s often a bath tip worth heeding.

The Complete Liquidation: $2.95M Position Abandoned

According to an SEC filing released January 27, 2026, Graphene Investments SAS liquidated its entire BBWI stake during the fourth quarter. The transaction involved selling 114,700 shares based on quarterly average pricing, reducing the fund’s holding from 1.9% of assets under management to zero. The quarter-end value change of $2.95 million reflected both the sale itself and broader price movements during the period.

This wasn’t routine portfolio rebalancing. A full liquidation typically indicates a fundamental shift in investment thesis—the fund’s conviction in Bath & Body Works’ turnaround prospects has collapsed entirely.

Why Smart Money Bailed: BBWI’s Performance Crisis

Bath & Body Works stock has become a cautionary tale. Over the past year, shares plummeted 39.5%, while the S&P 500 gained 18%—a devastating 57.5-percentage-point performance gap. The damage accelerated in late November when shares crashed 25% in a single day following disappointing third-quarter earnings.

The numbers tell the story: Q3 revenue hit $1.59 billion, down 1% year-over-year, while adjusted earnings per share of $0.35 missed analyst expectations. Management responded by slashing full-year guidance and warning of high single-digit sales declines ahead. Perhaps most damaging to brand perception, the company admitted it had relied excessively on heavy promotions—a death knell for a fragrance retailer targeting premium positioning.

Bath & Body Works’ Turnaround Hits Turbulence

CEO Daniel Heaf diagnosed the core problem bluntly: the company was “slow and inefficient.” His response—a $250 million cost-cutting initiative designed to fund product innovation—signals urgency. Yet analysts remain skeptical. The consensus rating is “hold,” with price targets implying minimal upside. Competitive pressures are mounting, margins are eroding, and execution uncertainty runs high.

Despite these headwinds, Bath & Body Works does retain genuine strengths. The company generates robust free cash flow, maintains a 3.74% dividend yield, and dominates its home fragrance and personal care category with $7.35 billion in trailing twelve-month revenue and $699 million in net income.

The Bath Tip: What This Exit Reveals About Risk

When institutional investors like Graphene move to zero, it’s a bath tip about conviction. This wasn’t a modest reduction—it was complete capitulation. The fund has decided the turnaround risks are too steep relative to near-term recovery prospects.

For contrarian investors comfortable with multiyear timelines and genuine restructuring risk, Bath & Body Works could offer compelling value at depressed valuations. The underlying business remains profitable and cash-generative. Category dominance and strong brand recognition aren’t disappearing overnight.

But for conservative portfolios, this is a clear bath tip to stay away. The margin of safety simply isn’t there yet. Too many execution hurdles remain, too much competitive pressure persists, and too much brand damage from excessive promotions needs healing. This is a turnaround story, not a value trap rescue—and turnarounds take time most investors underestimate.

Investment Takeaway

Graphene’s complete exit from Bath & Body Works isn’t just another fund trade—it’s a bath tip about where institutional conviction stands. The fund was comfortable owning this name; now it’s not. That’s worth paying attention to, even if your personal risk tolerance and timeline differ from theirs.