L Brands (LB), owner of Victoria’s Secret and Bath & Body Works, is a bargain with a PE of only 12.5. EPS are expected to fall by 20% this year as the company calls a halt to its catalogue business and shuts it swimwear lines but the company is investing in growth internationally and on line.
International and online sales have been growing by 10% and 20% respectively and that could ramp up as the company directs time and resources to these areas. China, where LB only has 33 stores, is a huge opportunity.
It is true that retailers are suffering. But for companies such as LB, with a no. 1 market leading brand, the potential to successfully develop direct online sales is much stronger than for general retailers. Add in huge international opportunities and LB’s valuation looks too cheap.
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