Persisting promotions elevate uncertainty
We are downgrading LB to Neutral. After posting visible improvement through the Fall season, the last three months have shown a concerning change in trend at VS. With clearance inventory still seen in stores, and inventory remaining high, we expect it will take at least through the summer for VS to get back on track. The risk, however, is that if the current trends persist and inventories do not get realigned, expectations for 2H may also be difficult to meet. Until we see the end to markdowns on the core lingerie, the uncertainty on 2H will remain an overhang.L Brands is a holding company. Through its subsidiaries, the company is a specialty retailer of women's intimate and other apparel, personal care, beauty and home fragrance products. The company sells its merchandise through company-owned specialty retail stores in the U.S., Canada, the U.K., Ireland and Greater China, and through its websites and other channels. The company's other international operations are primarily through franchise, license and wholesale partners. The company has three reportable segments: Victoria's Secret, Bath & Body Works and Victoria's Secret and Bath & Body Works International. The company operates the following retail brands: Victoria's Secret, PINK and Bath & Body Works.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
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