Stock Analysis & Valuation L Brands, Inc. (LTD.DE)

• Previous Close: €67.16
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method		n/a
Graham Formula	12.70	-81

Strategic Investment Analysis

Company Overview

L Brands, Inc. (LTD.DE) is a leading global retailer specializing in women's intimate apparel, personal care, beauty, and home fragrance products. Headquartered in Columbus, Ohio, the company operates through its well-known brands, including Victoria's Secret, PINK, Bath & Body Works, and La Senza. With a strong presence in the U.S., Canada, the U.K., and Greater China, L Brands serves customers through mall-based retail stores, e-commerce platforms, and international franchise partnerships. The company's Victoria's Secret segment is a dominant player in the lingerie market, while Bath & Body Works is a leader in personal care and home fragrance products. L Brands' diversified portfolio and omnichannel strategy position it as a key player in the consumer cyclical sector, catering to evolving consumer preferences in fashion and self-care. With a workforce of 25,500 employees, the company continues to innovate and expand its global footprint.

Investment Summary

L Brands presents a compelling investment case with its strong brand equity, diversified revenue streams, and robust cash flow generation. The company reported revenue of €7.56 billion and net income of €794 million for FY 2023, with diluted EPS of €3.41. Operating cash flow stood at €1.14 billion, supported by efficient capital expenditures of €328 million. However, investors should note the company's high beta of 1.66, indicating higher volatility compared to the market. The absence of total debt is a positive, but the lack of a dividend (€13.15 per share) may deter income-focused investors. The company's focus on e-commerce and international expansion could drive future growth, but competition in the apparel and personal care sectors remains intense.

Competitive Analysis

L Brands holds a competitive edge through its iconic brands, Victoria's Secret and Bath & Body Works, which enjoy strong customer loyalty and brand recognition. Victoria's Secret dominates the lingerie market, while Bath & Body Works leads in personal care and home fragrance categories. The company's omnichannel strategy, combining physical stores with e-commerce, enhances its market reach and customer engagement. However, L Brands faces stiff competition from fast-fashion retailers and direct-to-consumer brands that offer lower prices and quicker trend adaptation. The company's reliance on mall-based stores could be a vulnerability as consumer preferences shift toward online shopping. Additionally, international expansion presents both opportunities and challenges, given varying consumer tastes and regulatory environments. L Brands' ability to innovate and adapt to changing market dynamics will be crucial in maintaining its competitive position.

Major Competitors

• Hanesbrands Inc. (HBI): Hanesbrands is a major competitor in the intimate apparel and activewear segments. Its strengths include a strong portfolio of brands like Hanes and Champion, and a focus on cost efficiency. However, it lacks the premium brand appeal of Victoria's Secret and has limited presence in the personal care and home fragrance markets.
• L Brands, Inc. (LB): L Brands competes with itself through its various segments. Victoria's Secret and Bath & Body Works are market leaders in their respective categories, but internal competition for resources and focus could be a challenge.
• PVH Corp. (PVH): PVH Corp. owns iconic brands like Calvin Klein and Tommy Hilfiger, competing in the premium apparel segment. Its strengths include global brand recognition and a diversified product portfolio. However, it does not have a significant presence in the intimate apparel or personal care markets where L Brands excels.
• Ulta Beauty, Inc. (ULTA): Ulta Beauty is a key competitor in the beauty and personal care segment. Its strengths include a vast store network and a strong loyalty program. However, it does not compete in the intimate apparel market, which is a core strength of L Brands.
• Kohl's Corporation (KSS): Kohl's competes in the apparel and home fragrance segments. Its strengths include a broad customer base and frequent promotions. However, it lacks the brand exclusivity and premium positioning of Victoria's Secret and Bath & Body Works.