Wall Street Analysts Bullish on Victoria’s Secret Parent Company

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L Brands' stock surged after it laid out plans to save the company.

Shares of parent company L Brands were up about 25 percent pre-market, and shot up by more than 35 percent at the start of Wednesday’s session after the retailer late Tuesday revealed plans to reduce annual costs by about $400 million, including a reduction of headcount at its corporate headquarters of about 15 percent.

In addition, L Brands, which includes the Bath & Body Works brand in the greater portfolio, gave Wall Street a preview of its latest quarterly earnings ahead of the Aug. 19 release date, saying it expects total company sales to be down about 20 percent year-over-year. That works out to roughly 10 percent at Bath & Body Works and 40 percent at Victoria’s Secret. Still, the numbers were enough to tame investor fears — at least for now.

But more headwinds were to come, including the coronavirus and subsequent shutdowns around the globe. To help cut costs, the company has previously said it would close some Victoria’s Secret stores and continue to evaluate the China and U.K. businesses. Meanwhile, the company closed its Victoria’s Secret flagship in Hong Kong that same month and now said it will likely close other unprofitable stores in the Greater China market, or at least renegotiate leases.

Jen Redding, equity analyst at Wedbush, said L Brands’ stock is best seen as a value buy for long-term investors.

 

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