Market Overview

Victoria's Secret Issues Are 'Self-Inflicted,' But L Brands Can Bounce Back

Share:
Victoria's Secret Issues Are 'Self-Inflicted,' But L Brands Can Bounce Back
Related
Benzinga's Top Upgrades, Downgrades For November 17, 2017
The Market In 5 Minutes: Tesla's Truck, Media Bids, ICOs, And More
Johnson & Johnson: Dividend King With Good Total Return And Dividend Growth (Seeking Alpha)

Analysts at Bernstein began covering U.S. softline and specialty retail group Monday, holding an overall bullish outlook on apparel. Among the multiple companies the firm's Jamie Merriman began covering is L Brands Inc (NYSE: LB), the parent company of Victoria's Secret and Bath & Body Works.

Merriman initiated coverage of L Brands' stock with an Outperform rating with a $57 price target, which implies an upside potential of more than 50 percent. The main thesis behind the bullish stance is that Victoria's Secret's poor performance as of late is very much "self-inflicted" and not due to a slowdown in the overall category or even a mall issue.

In fact, Victoria's Secret's problems is a "problem of [its] own making," as management made several mistakes as of late, the analyst suggested. For example, the company exited the swim and apparel category, which accounted for 9 percent of Victoria's Secret's sales in 2015 and has proven to be the biggest driver of declining sales.

Finally, the retailer brought in new management at both VS Beauty after experiencing market share losses, Merriman continued. There are signs of improvements as evidenced by a positive sales growth in the second quarter in the beauty segment. The company also brought in new management at Bath & Body Works to implement new techniques and rebuild market share.

At time of publication, shares of L Brands were up 4.43 percent at $39.58.

Related Links:

L Brands Is A 'Show Me' Story Now

L Brands: 4 Reasons For Concern
____________
Image Credit: By Lucas Secret - Own work, CC BY-SA 3.0, via Wikimedia Commons

Latest Ratings for LB

DateFirmActionFromTo
Nov 2017BuckinghamMaintainsNeutral
Nov 2017BMO CapitalMaintainsMarket Perform
Nov 2017RBC CapitalUpgradesSector PerformOutperform

View More Analyst Ratings for LB
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas Price Target Initiation Top Stories Analyst Ratings Movers Trading Ideas Best of Benzinga

 

Related Articles (LB)

View Comments and Join the Discussion!

Partner Center