Author Topic: LB - L Brands  (Read 11785 times)

johnny

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Re: LB - L Brands
« Reply #10 on: March 08, 2019, 07:56:04 AM »
Oh, this is worth noting: viewership for the famous Victoria's Secret Fashion Show

2012: 9.5 million
2013: 9.7 million
2014: 9.3 million
2015: 6.6 million
2016: 6.7 million
2017: 5.0 million
2018: 3.3 million

This can be taken out of context and used to express excessive bearishness about the brand, but it still illustrates that there are very real structural changes happening that VS has no plan to address.

Like I said in my first (substantially revised) post: it's hard to figure out where the bottom is.


Spekulatius

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Re: LB - L Brands
« Reply #11 on: March 08, 2019, 08:23:44 AM »
Oh, this is worth noting: viewership for the famous Victoria's Secret Fashion Show

2012: 9.5 million
2013: 9.7 million
2014: 9.3 million
2015: 6.6 million
2016: 6.7 million
2017: 5.0 million
2018: 3.3 million

This can be taken out of context and used to express excessive bearishness about the brand, but it still illustrates that there are very real structural changes happening that VS has no plan to address.

Like I said in my first (substantially revised) post: it's hard to figure out where the bottom is.

LOL, the table explains LBrands problem better than a lengthy writup could do.
Life is too short for cheap beer and wine.

TwoCitiesCapital

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Re: LB - L Brands
« Reply #12 on: March 08, 2019, 01:47:36 PM »
While the drop in viewership is concerning, it's hard for me to extrapolate that as damage to the brand.

1) 2018's was on a new network and a new night of the week (Sunday vs Tuesday) - I have to imagine the Sunday night viewership is FAR more competitive than Tuesday night's.

2) The cable industry itself is in secular decline. The reason we didn't watch this year was because we no longer have cable and thus are no longer aware of what shows come on when. Had VS had a streaming deal with Hulu/Netflix/HBO/Sling, there's a good chance we'd have watched it.

These aren't non-issue. The drop in viewership matters, but I don't know if it all can be attributed to the decline of the brand. I don't even know if MOST of it can be attributed to that.

I still tend to think this is an overreaction. The management has had missteps. The market is developing a new segment. Both of these impact the valuation of the company, but neither leads me to believe that there's an existential crisis for the VS brand.

If that's the case, this is probably worthwhile to own for BBW alone while VS works it out to catch their stride again.

johnny

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Re: LB - L Brands
« Reply #13 on: March 08, 2019, 02:18:10 PM »
I suspect the secular decline in linear TV viewership is actually analogous to what's going on with Victoria's Secret: a product engineered to appeal to the mode of the distribution will gobble up huge share in the old media context, and be doomed to decreasing share in the new media context.

There will never be another show as successful as Friends. The proliferation of a broad spectrum of narrowly-tailored and taste-specific content will soak up attention from more and more of the available eyeballs. The pool of people who are content to consume generic content is simply smaller now. This isn't to say another show like Friends couldn't be made today, just that it couldn't achieve the same "cultural sweep" that was possible in the past.

Likewise, VS's brand isn't necessarily impaired: they still "own" consensus American idealized female beauty. But since there are other more specific and taste-matched offerings that have been made available, the question is how many women are going to feel like they have to compromise and sign up for what they might regard as a sort of blande and generic product. Women who, 20 years ago, would have been choosing between VS (sexy) and Sears (granny) are now going to be choosing between VS (generic sexy), LULU (athletic sexy), la perla (euro sexy), coco de mer (euro slutty), savage x fenty (curvy slutty), aerie (curvy comfy), and so on. VS might be viewed by many of these women as a perfectly suitable fallback option. But it is now a fallback option. This is a big difference.

My big mistake in my first analysis was getting distracted by the marketing gimmicks (weaponizing the politics/ideology for social media hits). There is an actual, meaningful underlying business model change here, and I can observe nothing but miserable failure on L Brand's part in failing to recognize and respond to it.
« Last Edit: March 08, 2019, 02:26:25 PM by johnny »

johnny

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Re: LB - L Brands
« Reply #14 on: March 08, 2019, 02:27:10 PM »
Feels like a good options play, though.

Spekulatius

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Re: LB - L Brands
« Reply #15 on: March 08, 2019, 05:47:59 PM »
I suspect the secular decline in linear TV viewership is actually analogous to what's going on with Victoria's Secret: a product engineered to appeal to the mode of the distribution will gobble up huge share in the old media context, and be doomed to decreasing share in the new media context.

There will never be another show as successful as Friends. The proliferation of a broad spectrum of narrowly-tailored and taste-specific content will soak up attention from more and more of the available eyeballs. The pool of people who are content to consume generic content is simply smaller now. This isn't to say another show like Friends couldn't be made today, just that it couldn't achieve the same "cultural sweep" that was possible in the past.

Likewise, VS's brand isn't necessarily impaired: they still "own" consensus American idealized female beauty. But since there are other more specific and taste-matched offerings that have been made available, the question is how many women are going to feel like they have to compromise and sign up for what they might regard as a sort of blande and generic product. Women who, 20 years ago, would have been choosing between VS (sexy) and Sears (granny) are now going to be choosing between VS (generic sexy), LULU (athletic sexy), la perla (euro sexy), coco de mer (euro slutty), savage x fenty (curvy slutty), aerie (curvy comfy), and so on. VS might be viewed by many of these women as a perfectly suitable fallback option. But it is now a fallback option. This is a big difference.

My big mistake in my first analysis was getting distracted by the marketing gimmicks (weaponizing the politics/ideology for social media hits). There is an actual, meaningful underlying business model change here, and I can observe nothing but miserable failure on L Brand's part in failing to recognize and respond to it.

Yes I think this hit the nail on the head. Segmentation causes the decline of major brands. I donít know the bra business well (never been to a VC store either), but itís analogous what happens with Main Street beer brands and craft beers etc. Declining exposure via their distribution channels (less Tv and print ads viewers and less mall traffic) donít help either. Maybe they can stabilize it, but the business unlikely will go back to where it once was.
Life is too short for cheap beer and wine.

johnny

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Re: LB - L Brands
« Reply #16 on: March 12, 2019, 10:09:24 AM »
Just updating to say that I'm long.

1. If BBW doesn't collapse, it is probably in fact worth very close to the market quote for LB. For some reason I suspect that if BBW's SSS begin to crest, the market response isn't going to be to drive the stock down another 50%. Maybe I'm wrong here, but I just think I'll be able to duck out of the company without getting too hurt in this scenario.

2. Similarly, while I've articulated my disaster scenario for VS (an attempted brand pivot to Capture The Moment), it's another scenario that I think I can ditch before the market figures it out. In fact, I'm guessing the immediate market response to this would be enthusiasm.

3. Another long-term disaster that might generate short-term profits: the spinoff idea. I don't put a high probability on this; I don't think management has any interest. But it would probably produce a nice trading gain at today's price.

Bottom line, if VS is being priced for death, any sign of life (even if a last gasp) has the potential to get spun into a new bull-ride. A recovery in comps, some sort of numerical substantiation of the Chinese market opportunity, whatever. And as VS' target demo would say, I'm here for it.

stahleyp

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Re: LB - L Brands
« Reply #17 on: May 01, 2019, 11:01:36 AM »
Paul

stahleyp

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Re: LB - L Brands
« Reply #18 on: August 27, 2019, 09:11:43 AM »
This is looking interesting. I've seen estimates that Bath and Body Works is worth $25 per share and Victoria's Secret is worth $15. So even if you chop those in half, you're looking at some potential here.
Paul

Castanza

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Re: LB - L Brands
« Reply #19 on: August 27, 2019, 10:18:16 AM »
This is looking interesting. I've seen estimates that Bath and Body Works is worth $25 per share and Victoria's Secret is worth $15. So even if you chop those in half, you're looking at some potential here.

The question is will they ever do it? Shareholders seem to be getting a bit antsy with the class actions. But there still seems to be very little talk about a spin-off.

https://www.retaildive.com/news/l-brands-hit-with-class-action-over-financial-disclosures/561763/

https://www.bloomberg.com/news/articles/2019-08-21/victoria-s-secret-sags-again-as-bath-body-works-keeps-growing
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