BBWI
Bath & Body Works Inc
Consumer
01/28/2021
Presented
| Date | 01/21/2021 |
| Price | $45.90 |
| Market Cap | $12.77B |
| Ent Value | $16.09B |
| P/E Ratio | N/A |
| Book Value | N/A |
| Div Yield | 0.65% |
| Shares O/S | 278.11M |
| Ave Daily Vol | 3,814,723 |
| Short Int | 4.95% |
Current
| Price | $31.11 |
| Market Cap | $6.82B |
| L Brands, Inc. engages in the retail of women’s intimate and other apparel, personal care, beauty, and home fragrance products. It operates through the following segments: Victoria’s Secret, Bath & Body Works, and Victoria's Secret and Bath & Body Works International. The Victoria’s Secret segment sells women’s intimate and other apparel, personal care, and beauty products under the Victoria’s Secret and PINK brand names. The Bath & Body Works segment offers body care, home fragrance products, soaps, and sanitizers under the Bath & Body Works, White Barn, C.O. Bigelow, and other brand names. The Victoria's Secret and Bath & Body Works International segment includes the Victoria's Secret and Bath & Body Works stores located outside of the U.S. and Canada, as well as the online business in Greater China. The company was founded by Leslie Herbert Wexner in 1963 and is headquartered in Columbus, OH. |
Please note, after the close on August 2, 2021 L Brands Inc (LB) changed its company name and symbol to Bath & Body Works Inc (BBWI) after spinning off Victorias Secret & Co. (VSCO). Shareholders of LB received 1 share of VSCO for every 3 shares of LB. BBWI and VSCO began trading separately on August 3. The text of the idea will make reference to the original company, L Brands Inc.
Publicly traded companies mentioned herein: Hermes International (RMS FP), LVMH Moet Hennessy Louis Vuitton SE (MC FP), L Brands (LB)
Highlights
The presenter is long shares of L Brands (LB), discounting the negative consensus view around LB’s mall-based footprint as it fails to account for the company's successful pivot into an omnichannel retailer in the wake of the pandemic. He sees meaningful upside from the Bath and Body Works (BBW) segment and believes that business will grow HSD% - LDD%. If it were a standalone business, BBW would generate a $4 EPS run rate to which he would apply a market multiple of 20x earnings. As earnings compound toward $5, his target 3 years out is $100 using the 20x P/E multiple and adding $7-8 of value from the potential divestiture of Victoria's Secret.
While LB has a massive mall footprint and concerns around mall-based secular pressure remain, the presenter believes it would be incorrect to view LB as a structurally challenged brick and mortar retailer. The pandemic has opened up new online and digital avenues to drive sales, and LB has successfully pivoted into an omnichannel retailer.
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