Victoria’s Secret Owner L Brands Inc (LB) Loses Another Fan

Shares of L Brands Inc (NYSE:LB), a specialty retailer offering women’s apparel, beauty, and personal care products, have shed nearly half their value over the past year amid a substantially bearish environment for the retail sector. Revenue over the past year has been trending down, bringing down earnings significantly as a drop in comparable sales directly cuts into the margin of fixed-asset heavy retailers such as LB, which owns more than 3K physical locations. NYSE:LB L Brands Past and Future Earnings by Simply Wall St The sell-side analysts covering the company expect a rebound in earnings going forward; however, some of its most loyal fans are changing their stance. The latest one is long-time bull Cowen, which now expects the stock to remain stuck at current price levels — multi-year lows. The broker-dealer downgraded the retailer on concerns of product-pricing and it sees current risks offsetting the positives in the stock. Cowen now has a ‘neutral’ rating on LB. Among factors behind the downgrade, Cowen said new competition could bite into LB’s market share, primarily its women’s intimate apparel business. Earlier this month, Wells Fargo had called out a limited upside potential for constantly rising prices at Victoria’s Secret, owned by LB. They conducted a study on consumer behavior only to find out that 28% respondents will reduce spending at the store, while 58% found the prices too high. LB also owns brands such as La Senza, PINK, and Bath & Body Works. These concerns also reflected in a 7% drop in Victoria’s Secret sales, which account for over 60% of the overall revenue, during August. The stock fell more than 5% after Cowen’s comment, reversing its nascent rebound from $36-mark to north of $40 earlier this month. Although LB trades at a low PE of just 11.4, the concerns around it losing market share can cause the stock to remain under pressure until comps and margins start improving. Looking at companies with impressive track-record and strong growth outlook, here’s a list