by Shabbar H. Kothari
B&BW shows strength. VS angels are falling.
|VS Economic |
|Fair Value |
$24 to $28
At $27.71, L Brands, Inc. (LB) is fairly priced and a NO-BUY. Victoria’s Secret, LB’s flagship retail brand, is past its prime. LB’s body-care retail segment, Bath & Body Works, will maintain its high profitability and will grow at the same rate as the industry.
Reasonable expectations for LB up to 2023 include YOY sales growth rate ranging 2-3.5%, with profitability levels similar to today, and lower capital efficiency. The resulting fair value range is $24 to $28, making LB an underwhelming prospect.
For full report, see link below