LB - L Brands

[stahleyp]

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

Yeah but the value of the business is still there regardless of the actual spin off (though it would take longer for the market to price it as such).

One of my concerns is with the quality of the products. I was looking on the website and a number of the products have less than stellar reviews. Short term, I wouldn't be surprised if the stock got another dividend cut (a 7%+ yield seems pretty high for a retailer with declining sales for its flagship line), in which case the stock would drop a bit more, I would imagine.

I'm guessing the Epstein stuff is probably also weighing on the stock. I don't think the brand is dead as what people seem to think. It has a ton of fans on social media (more than many competitors), the store reviews are positive. Though, part of me is like "you know nothing about fashion and should stay away." haha

[BG2008]

I think a bunch of middle aged guys trying to decipher L Brands is a disaster in the making

Maybe ask the opinion of some 20 year old women to weigh in.  I may ask my intern to comment on this thread.  If you are not talking about inclusivity, body positivity and etc, you shouldn't be touching this stock.  Rhianna made a cosmetic line that offer over 20 skin tones and one specific for albinos.  Apparently that decision created a ton of positive PR.   L Brands with its connection to Epstein and its overly focus on the VS show feels very demeaning to women, especially the early 20s who are raised on social justice and body positivity.  It just feels that L Brands are very out of touch.  But what do I know?  I'm a late 30s dude who never bought women's underwear.  Ask some young women for their opinion. 

[merkhet]

I think a bunch of middle aged guys trying to decipher L Brands is a disaster in the making

Maybe ask the opinion of some 20 year old women to weigh in.  I may ask my intern to comment on this thread.  If you are not talking about inclusivity, body positivity and etc, you shouldn't be touching this stock.  Rhianna made a cosmetic line that offer over 20 skin tones and one specific for albinos.  Apparently that decision created a ton of positive PR.   L Brands with its connection to Epstein and its overly focus on the VS show feels very demeaning to women, especially the early 20s who are raised on social justice and body positivity.  It just feels that L Brands are very out of touch.  But what do I know?  I'm a late 30s dude who never bought women's underwear.  Ask some young women for their opinion.

+1

[Gregmal]

LOL So true.

I get some help; my little brother is in grad school out in liberalville Long Island. Occasionally provides some useful insight and perspective.

You know what almost every girl in that demographic owns? Elephant pants.... a far cry from when I was in school and VS was mandatory(from the girl's perspective) if you wanted to be sexy...

[Castanza]

I think a bunch of middle aged guys trying to decipher L Brands is a disaster in the making

Maybe ask the opinion of some 20 year old women to weigh in.  I may ask my intern to comment on this thread.  If you are not talking about inclusivity, body positivity and etc, you shouldn't be touching this stock.  Rhianna made a cosmetic line that offer over 20 skin tones and one specific for albinos.  Apparently that decision created a ton of positive PR.   L Brands with its connection to Epstein and its overly focus on the VS show feels very demeaning to women, especially the early 20s who are raised on social justice and body positivity.  It just feels that L Brands are very out of touch.  But what do I know?  I'm a late 30s dude who never bought women's underwear.  Ask some young women for their opinion.

I agree with this to an extent. But at the end of the day VS was created by a man. Yoga pants were created by men. How women dress is also heavily influenced by men. Sure women primarily dress to compete against each other, but it all comes back to attracting a mate lol. As crass as that is it's true. So to say men shouldn't try to evaluate the market they helped create is a bit inaccurate. Both opinions certainly add value. Women have had many cultural and cosmetic shifts throughout history (see link). Yet at the end of the day most cosmetic choices have been partially driven by their "effectiveness" on men and partially driven by what makes women feel "sexy."

https://www.reddit.com/r/OldSchoolCool/comments/b5zxl0/girls_protest_dress_code_prohibiting_girls_from/

VS cancelled their fashion show this year so they are beginning to get a clue as to what shifting in the industry.

[Spekulatius]

LOL So true.

I get some help; my little brother is in grad school out in liberalville Long Island. Occasionally provides some useful insight and perspective.

You know what almost every girl in that demographic owns? Elephant pants.... a far cry from when I was in school and VS was mandatory(from the girl's perspective) if you wanted to be sexy...

Actually Long Island felt quite conservative when I lived there, at least some parts oft it. Now Stony Brook is a different matter.

[TwoCitiesCapital]

To the point of asking women, I have been asking my GF (25 years old) about her perspective on LB on many occasions over the last year.

She still likes them, but has admitted to hating the limited selection in bras (no bralettes).

That being said, she still has some PINK branded items, was excited to see them bring swimwear back, loves their athletic/athleisure options, and has a few other items from the store as well. She also shops at Arie and others so is not unaware of the alternatives.

I did the same back in 2009 when I was originally considering investing with the women I knew in college - they all said that no one can compete with LB.

A couple years back, I ran an Airbnb in NYC. Two French women stayed with me and hit EVERT VS on the island of Manhattan and came back with loads of stuff because, at the time, they couldn't get it in France.

Some of these anecdotes are more recent, others are from years ago, but I don't think societies' evolution of what is sexy/desirable/etc changes so quickly. I continue to believe that this is a temporary brand set-back and not an existential threat.

I do wish they'd stop putting their foot in their mouth with negative comments about inclusivity - the Epstein tie is just the flavor of the current news cycle and will fade.

[BG2008]

I think a bunch of middle aged guys trying to decipher L Brands is a disaster in the making

Maybe ask the opinion of some 20 year old women to weigh in.  I may ask my intern to comment on this thread.  If you are not talking about inclusivity, body positivity and etc, you shouldn't be touching this stock.  Rhianna made a cosmetic line that offer over 20 skin tones and one specific for albinos.  Apparently that decision created a ton of positive PR.   L Brands with its connection to Epstein and its overly focus on the VS show feels very demeaning to women, especially the early 20s who are raised on social justice and body positivity.  It just feels that L Brands are very out of touch.  But what do I know?  I'm a late 30s dude who never bought women's underwear.  Ask some young women for their opinion.

I agree with this to an extent. But at the end of the day VS was created by a man. Yoga pants were created by men. How women dress is also heavily influenced by men. Sure women primarily dress to compete against each other, but it all comes back to attracting a mate lol. As crass as that is it's true. So to say men shouldn't try to evaluate the market they helped create is a bit inaccurate. Both opinions certainly add value. Women have had many cultural and cosmetic shifts throughout history (see link). Yet at the end of the day most cosmetic choices have been partially driven by their "effectiveness" on men and partially driven by what makes women feel "sexy."

https://www.reddit.com/r/OldSchoolCool/comments/b5zxl0/girls_protest_dress_code_prohibiting_girls_from/

VS cancelled their fashion show this year so they are beginning to get a clue as to what shifting in the industry.

Historically true, but the game has shifted.  Instagram and influencers have totally changed the game.  If Kylie, Kim, and Khloe tried to start cosmetic and fashion brands 10-20 years ago, they would have to partner up with a brand or a retailer.  They unveil new products all day long now.  The same goes for Rhianna.  The game has changed.  Just like the CPG are being hurt by death by 1,000 cuts, the same is happening to fashion.  Admittedly, I use a lot of Instagram to follow mostly Michelin star restaurants and other interesting people.  But there is no shortage of wannabe professional Instragram models hawking all sorts of cosmetics, fashion, and weight loss solutions.   

One thing that I have to give credit to for large brands is that they are much better at quality control. 

[BG2008]

To the point of asking women, I have been asking my GF (25 years old) about her perspective on LB on many occasions over the last year.

She still likes them, but has admitted to hating the limited selection in bras (no bralettes).

That being said, she still has some PINK branded items, was excited to see them bring swimwear back, loves their athletic/athleisure options, and has a few other items from the store as well. She also shops at Arie and others so is not unaware of the alternatives.

I did the same back in 2009 when I was originally considering investing with the women I knew in college - they all said that no one can compete with LB. Obviously that was 10 years ago and the times have changed, but I'm still of the opinion that this is a temporary brand re-adjustment for the company and not an existential threat.

This is great feedback. 

I feel that the sample size of one is tough.  I ask my wife for her opinions on various brands over the years.  Lululemon, Ulta, etc.  She didn't see the value in Lulu and now loves it.  She totally dismissed Ulta and that has been a 5x since I asked her about it.   

Women don't buy much sexy underwear after a certain age.  So brands needs a complete new influx of new buyers.  This is why opinions of 18-20 year olds are so important.  I am not saying that my intern's opinion alone is valid.  But an opinion from a 20 year old is probably heavier in weight than that of a 25 year old. 

I swear I am not calling your GF old.

[TwoCitiesCapital]

To the point of asking women, I have been asking my GF (25 years old) about her perspective on LB on many occasions over the last year.

She still likes them, but has admitted to hating the limited selection in bras (no bralettes).

That being said, she still has some PINK branded items, was excited to see them bring swimwear back, loves their athletic/athleisure options, and has a few other items from the store as well. She also shops at Arie and others so is not unaware of the alternatives.

I did the same back in 2009 when I was originally considering investing with the women I knew in college - they all said that no one can compete with LB. Obviously that was 10 years ago and the times have changed, but I'm still of the opinion that this is a temporary brand re-adjustment for the company and not an existential threat.

This is great feedback. 

Women don't buy much sexy underwear after a certain age.  So brands needs a complete new influx of new buyers.  This is why opinions of 18-20 year olds are so important.  I am not saying that my intern's opinion alone is valid.  But an opinion from a 20 year old is probably heavier in weight than that of a 25 year old. 

I swear I am not calling your GF old.

LOL!

Totally understand and agree that newer entrants will carry more weight, but that also means the impacts of any brand perception are limited because in 5 years there is a new crop.

Also, moving beyond sexy underwear to athleisure, casual, and swim lines helps maintain the brand a little further along in a woman's life cycle is imagine so this trend is probably less important now than 10 years ago.