L Brands Cuts Dividend to Fuel Strategic Reset, but VS Continues to Struggle; Shares Undervalued
Narrow-moat L Brands’ third quarter was headlined by a dividend cut and leadership change at Victoria’s Secret. Despite the low-teens decline in shares, results were largely in line with the October sales results released on Nov. 8, calling for earnings per share of $0.15. While the firm outperformed our forecast on nearly all metrics, we don’t see a material change to our $43.50 fair value estimate as we expect our long-term outlook, including sales that rise 4% supported by VS and Bath and Bod...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.
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Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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