FBR Capital Remains Sidelined on L Brands (LB) Ahead of SSS Release
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FBR Capital reiterated a Market Perform rating and $75.00 price target on L Brands (NYSE: LB) ahead of the company's August SSS release. FBR is expecting LB to report SSS of +0.1%, below the Street's +0.4% estimates and flat guidance.
Analyst Susan Anderson commented, "We maintain our +0.1% SSS estimate for August (versus consensus of +0.4%, guidance of flat, and +6% LY). We see the following dominant August themes: (1) seven fewer tax-free days in August (primarily due to fewer days in Florida); (2) At VS, swim and apparel inventory exited stores by 2Q-end and were sold online in August; (3) continued beauty promotions at VS; (4) sequentially tougher August 2015 compares, particularly at VS; (5) less foreign exchange impact sequentially; and (6) continued strength at PINK during BTS. We expect LB's merch margin to be down (down in May, June, July), affected by a decline in beauty and clearing swim/apparel. LB shares have increased +3.3% over the past month, compared to +4.9% and +3.9% gains for the remainder of our specialty coverage and the S&P, respectively. We believe investors are expecting a comp better than the flat guide given recent outperformance versus guidance, and a +LSD comp could drive a positive reaction."
Shares of L Brands closed at $76.83 yesterday.
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