Stifel Remains Positive on L Brands (LB) Following August Sales; Says Thesis Remains Intact

September 1, 2016 8:57 AM EDT
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Price: $72.50 +0.36%

Rating Summary:
    11 Buy, 17 Hold, 2 Sell

Rating Trend: = Flat

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Stifel affirms L Brands, Inc. (NYSE: LB) at Buy with a price target of $90 following August 2016 sales results, which were released ahead of the opening bell on Thursday.

Analyst Richard Jaffe noted the following today:

  • Better Than Expected August Sales - August comp store sales, including direct, increased 2% to LY. Store only comps were flat. Merchandise margins were down significantly to LY, driven by increased promotional activity at VS.
  • Thesis Intact – Solid positive comps, 2%, at VS excluding the non go-forward categories, supports our thesis that: (1) LB is well positioned to capitalize on the current bralette trend, driving incremental sales and (2) the company will be able to more than replace the lost sales from exiting swim and apparel with higher margin merchandise, likely resulting in 5%-10% annual top-line growth at VS, with margin expansion, in the next several years.

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