L BRANDS INC. $68 (New York symbol LB; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 292.4 million; Market cap: $19.9 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.0%; TSINetwork Rating: Average; www.lb.com) owns 1,113 Victoria’s Secret lingerie stores and 1,640 Bath & Body Works personal care products outlets. Smaller chains include 153 La Senza (lingerie) locations in Canada and 29 Henri Bendel (jewellery) stores in the U.S.
L Brands is removing some clothing and slowerselling items like cosmetics from its Victoria’s Secret online store. However, to clear the discontinued goods, L Brands has cut their prices. That could squeeze its profit margins in the next few months.
Meanwhile, the company earned $188.4 million in its fiscal 2015 second quarter, which ended August 2, 2014. That’s up 5.3% from $178.9 million a year earlier. Per-share earnings rose 3.3%, to $0.63 from $0.61, on more shares outstanding.
Sales improved 6.3%, to $2.7 billion from $2.5 billion. Overall same-store sales gained 3%. Samestore sales also rose 3% at both Victoria’s Secret and Bath & Body Works.
The company expects to earn $3.03 to $3.18 a share for all of fiscal 2015, up slightly from its previous forecast of $3.00 to $3.15. The stock trades at a somewhat high 21.9 times the midpoint of the new range. The $1.36 dividend yields 2.0%.
L Brands is a hold.
