Founded in 1963 and in headquartered in Columbus, Ohio, L Brands is a specialty retailer of women's intimate and other apparel, personal care, home fragrance and beauty products. They own Victoria’s Secret, PINK, Bath & Body Works, La Senza and Henri Bendel brands.
The company operates more than 3,000 owned specialty stores in the US, Canada, the UK and China, and its brands are sold in more than 1,000 additional franchised locations worldwide. Their products are also available online.
Weak Guidance Reflects Rising Challenges
The company posted quarterly earnings of 48 cents per share beating the Zacks Consensus Estimate of 45 cents and also above the company’s initial guidance of 40-45 cents. However, the earnings were down 31% year over year. The company also missed our consensus estimate for sales.
The management cut their FY 2017 guidance. They now expect earnings in the range of $3.00-$3.20 per share, down from the previous guidance of $3.10-$3.40 and also below the previous year earnings of $3.74.
Shares plunged almost 7% in the after-hours trading and are now down about 46% this year.
Falling Estimates
Analysts have slashed their estimates for the company after weak guidance. Zacks Consensus Estimates for the current and next fiscal year have fallen to $3.12 per share and $3.19 per share from $3.24 and $3.33 respectively, before the report.
The Bottom Line
In addition to disappointing mall traffic, the retail space is going through a shift toward online shopping. With tightening labor markets, wage pressure has also started hurting retailers.
Further, the industry “Retail - Apparel and Shoes” is currently ranked 164 out of 265 Zacks industries (bottom 38%) and “Retail and Wholesale “sector is ranked 16 out of 16, suggesting potential underperformance in the short-to-medium term.
It would be better for investors to stay away from this stock and instead look at Children’s Place (PLCE) which is currently ranked Zacks Rank #1 (Strong Buy).
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Founded in 1963 and in headquartered in Columbus, Ohio, L Brands is a specialty retailer of women's intimate and other apparel, personal care, home fragrance and beauty products. They own Victoria’s Secret, PINK, Bath & Body Works, La Senza and Henri Bendel brands.
The company operates more than 3,000 owned specialty stores in the US, Canada, the UK and China, and its brands are sold in more than 1,000 additional franchised locations worldwide. Their products are also available online.
Weak Guidance Reflects Rising Challenges
The company posted quarterly earnings of 48 cents per share beating the Zacks Consensus Estimate of 45 cents and also above the company’s initial guidance of 40-45 cents. However, the earnings were down 31% year over year. The company also missed our consensus estimate for sales.
The management cut their FY 2017 guidance. They now expect earnings in the range of $3.00-$3.20 per share, down from the previous guidance of $3.10-$3.40 and also below the previous year earnings of $3.74.
Shares plunged almost 7% in the after-hours trading and are now down about 46% this year.
Falling Estimates
Analysts have slashed their estimates for the company after weak guidance. Zacks Consensus Estimates for the current and next fiscal year have fallen to $3.12 per share and $3.19 per share from $3.24 and $3.33 respectively, before the report.
The Bottom Line
In addition to disappointing mall traffic, the retail space is going through a shift toward online shopping. With tightening labor markets, wage pressure has also started hurting retailers.
Further, the industry “Retail - Apparel and Shoes” is currently ranked 164 out of 265 Zacks industries (bottom 38%) and “Retail and Wholesale “sector is ranked 16 out of 16, suggesting potential underperformance in the short-to-medium term.
It would be better for investors to stay away from this stock and instead look at Children’s Place (PLCE) which is currently ranked Zacks Rank #1 (Strong Buy).
One Simple Trading Idea
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today.
Learn more >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>