Skip to Content

L Brands Inc LB

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
Is it the right time to buy or sell?
Find out with Morningstar Premium
Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

No-Moat L Brands Announces Changes to Capital Structure; Lifts EPS Guidance Ahead of Investor Day

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

Ahead of no-moat L Brands’ brand investor day on July 19, the firm announced several capital structure actions around its Bath and Body Works, or BBW, business, which is set to operate as a single entity after spinning off Victoria’s Secret, or VS (scheduled for Aug. 2). First, it plans to execute a secondary offering of 20 million shares belonging to former CEO Leslie Wexner and others. But L Brands has already agreed to repurchase 10 million of these shares at the to-be-determined offering price, executing on part of the firm’s new $1.5 billion share repurchase program (which replaced the previous $500 million plan announced in March) and limiting share dilution. Then, given the strong cash flow BBW should generate as a standalone business, the firm expects to maintain a $0.60 annual dividend. Lastly, BBW expects to reduce debt by up to $500 million and maintain a 2 times debt to EBITDAR ratio, which should improve financial flexibility. We view these moves as prudent but don’t see any change to our Standard capital allocation rating.

Read Full Analysis

Company Profile

Business Description

L Brands is a women's intimate, personal-care, and beauty retailer operating under the Victoria's Secret, Pink, and Bath & Body Works brands. The company generates the majority of its business in North America, with about 5% of sales coming from international markets in fiscal 2020. Distribution channels include more than 2,600 stores and online, which represented about 35% of total sales in 2020. The company plans to spin off the Victoria's Secret brand into a separate public company by August 2021.

Contact
Three Limited Parkway
Columbus, OH, 43230
T +1 614 415-7000
Sector Consumer Cyclical
Industry Apparel Retail
Most Recent Earnings Apr 30, 2021
Fiscal Year End Jan 29, 2022
Stock Type Cyclical
Employees 92,300

Related

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.