L Brands Rose on September 26 amid Analysts’ Upgrade
L Brands (LB), which is an American fashion retailer, was one of the S&P 500’s top five gainers on September 26, 2017. After regaining strength at the end of last week, L Brands started this week on a stronger note by rising on Monday. It opened higher on Tuesday and closed the day at the highest level in six weeks.
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Lower same-store sales dented the sentiment
L Brands owns major brands like Victoria’s Secret, Lane Bryant, Bath & Body Works, and Abercrombie & Fitch. L Brands started to fall at the beginning of June due to lower same-store sales, especially in its Victoria’s Secret brand. The 6% fall in L Brands’ same-store sales in June, which includes a 17% fall in Victoria’s Secret sales, dented the market sentiment. The stock started to trend lower in July. L Brands’ investment to remodel its store didn’t trigger buying amid the dented market sentiment. According to management’s announcement in August, 420 Bath & Body Works stores will be revamped by the end of 2017.
Why did L Brands gain strength this week?
In addition to these factors, the increasing dominance of online retail destinations like Amazon (AMZN) impacted traditional retail sales trends and weighed on L Brands. The sentiment improved this week. Analysts conducted ground checks at stores to evaluate the stock. Analysts upgraded L Brands’ rating. The analysts at Atlantic Equities upgraded L Brands from “neutral” to “overweight” with a yearly target price of $56. Commenting on the changes made in the Victoria’s Secret stores, analysts said that the bigger part of the sales floors was allocated to high-fashioned and high-priced products. The smaller part of the floors was allocated to low-priced products.
On September 26, L Brands rose 4.0% and closed the day at $42.55—the highest daily close since August 9.