Low Visibility On Impact Of Recent Changes At Victoria's Secret Keeps MKM Neutral On L Brands

Citing several major changes at Victoria's Secret unit of L Brands Inc LB, MKM Partners said the impact of the changes reduces visibility on the company. Consequently, the firm remains on the sidelines.

The firm's softlines retail analyst Roxanne Meyer sees the management changes, including the departure of CEO at Victoria's Secret and lingerie GMM, and changes effected in the promotional strategy as the major ones. Though these changes create uncertainty, the analyst sees opportunities in a new trend in intimate apparels.

The firm expects that the elimination of coupons without prior testing will impact sales. MKM's Partners' survey also found that catalogs, which were removed at Victoria's Secret, have triggered purchases in the past.

MKM Partners estimates $0.57 earnings per share for the second quarter, $0.45 for the third quarter and $2.06 for the fourth quarter. Revenues are estimated to be $2.90 billion for the second quarter, $2.52 billion for the third quarter and $4.493 billion for the fourth quarter.

MKM Partners has a Neutral rating and $60 price target on L Brands. At time of writing, shares were down 2.6 percent at $72.42 on below average volumes of 720,185.