|Bid||15.06 x 800|
|Ask||15.20 x 1100|
|Day's range||14.83 - 15.81|
|52-week range||8.00 - 28.02|
|Beta (5Y monthly)||1.24|
|PE ratio (TTM)||N/A|
|Earnings date||19 Aug 2020 - 24 Aug 2020|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||20 Feb 2020|
|1y target est||16.50|
After the COVID-19 pandemic dashed L Brands' (NYSE: LB) hopes of selling a controlling stake in its troubled Victoria's Secret brand, the company is floating a bond offering totaling $1.25 billion for cash to fund its business. L Brands had worked out a deal to sell Victoria's Secret to Sycamore Partners, a private equity firm, for approximately $525 million. L Brands and Sycamore eventually agreed to cancel the acquisition.
(Bloomberg Opinion) -- Even the most upmarket buyers like to get their money’s worth. No wonder LVMH Moet Hennessy Louis Vuitton SE is having second thoughts about its $16 billion takeover of Tiffany & Co., according to Women’s Wear Daily.Walking away from the deal, which is due to close shortly, wouldn’t be ideal after all the fanfare made about the merits of buying the iconic U.S. jewelry brand. But it would be remiss of LVMH Chairman Bernard Arnault not to try to get better terms — particularly since he has the advantage.The world has changed since the takeover was agreed in November. The Covid-19 pandemic has dented luxury goods demand with shops shuttered and sweatpants-wearing consumers locked down with nowhere to go. Industrywide sales could fall as much as 35% this year, according to Bain & Co. The civil unrest in the U.S. is another risk, particularly for an American brand.So, depending on the fine print in the purchase agreement, Arnault could try to wriggle out altogether. There are doubts that it will go ahead as planned. Tiffany shares closed at $117 on Tuesday, significantly lower than LVMH’s $135 offer price. But dropping the deal now, particularly if it led to a lengthy legal battle, could risk some reputational damage. It could also signal that LVMH, the world’s dominant luxury conglomerate, built on a history of strategic, successful acquisitions, isn’t so resilient after all. True, even after the pandemic, LVMH’s market capitalization is close to 200 billion euros ($224 billion). So Tiffany is a relatively modest transaction. But the French fashion giant won’t have escaped the maelstrom, not only in luxury goods, but in cosmetics, with its Sephora chain, and in duty-free travel retail, with DFS.Tiffany is still a prized asset, with huge potential if it can be elevated from simply affordable luxury to mega-bling. So Arnault is most likely to try to burnish his standing as a dealmaker by extracting better terms for his shareholders. Especially since Tiffany already needed some polish to achieve its potential, and the task will be even more difficult now. It will require significant investment both in the company’s product range and marketing.Against this backdrop, trying to save on the purchase price looks sensible. A precedent has already been set by Sycamore Partners, which tried to extract itself from its $525 million deal to buy lingerie brand Victoria’s Secret. In the end, L Brands Inc. ended up terminating the agreement. But it’s hard to see Tiffany doing this — it’s unlikely to want to pursue its turnaround plan in a such a difficult environment without a muscular parent. Given the luxury slump, it’s not obvious that Richemont or Gucci-owner Kering SA would step in.Of course, Arnault could take his chances, withdrawing now — if he can — with the aim of trying to buy Tiffany again later at a lower price. But that’s a risky strategy. Another friendly deal wouldn’t likely be forthcoming, and often once a trophy asset is lost, it doesn’t become available again.Arnault would be better off holding onto this bauble, and, like many luxury shoppers right now, trying to negotiate a hefty discount.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The IPO market just got a shot of caffeine from JDE Peet’s BV. Don’t expect other consumer listings to get such a rush.The owner of Peet’s Coffee, Douwe Egberts, Kenco and Tassimo on Friday priced shares in its initial public offering at 31.50 euros, in the upper half of the offering range, valuing the company at 15.6 billion euros ($17.3 billion), and rose to about 35.50 in mid-morning trading.The biggest European IPO this year, pulled off in a swift 10 days, is a remarkable feat for a consumer business in the midst of a pandemic and a looming global recession. But JDE Peet’s has been uncannily well-placed to capitalize on changing consumer habits during lockdown, the prospects for reopening and a resurgence in equity markets. The Dutch company was floated by JAB Holding Co., the investment fund backed by Germany’s billionaire Reimann family. Cornerstone investors, including funds run by George Soros’s firm, had agreed to take up a third of the offering, setting the tone.In a world crowded with coffee chains, JDE Peet’s gets 80% of its sales from coffee that is drunk at home. That meant it benefited as corner cafes shuttered and people working from home were forced to become their own baristas. Now that they can start going out again, it’s ready to serve them their favorite hot beverage too at the Peet’s Coffee chain. And just as Nestle SA benefited from people looking to stock up on the Starbucks-branded coffee it sells in supermarkets, so JDE Peet’s may gain new customers at its cafes if they discovered its products in the grocery store during lockdown. As consumers navigate post-lockdown life, JDE Peet’s looks well insulated. That may explain why the valuation, as of mid-morning trading, is approaching that of Starbucks Corp. on a calendar 2019 enterprise-value-to-Ebitda basis. With consumers likely pulling in their purse strings, homemade coffee may be more popular than pricey takeaway lattes. Yet the valuation may also reflect optimism about reopening, and expectations that people will be eager to get out and about. Early indications from U.S. retailers, such as discount-chain owner TJX Cos Inc. and even department store Macy’s Inc., are that sales have been stronger than expected since Americans were able to shop in person once again.And let’s not forget about the IPO timing with stock markets gaining from their lows in March. That may be one reason why Peet’s was so keen on an accelerated book build: to avoid any sudden market turbulence.The fortunate confluence of factors may not come together for other consumer-facing groups looking to float or spin off a division. L Brands Inc.’s desire to eventually separate its Victoria’s Secret lingerie chain comes to mind. It was grappling with a tired image and too many stores even before the Covid-19 outbreak.As for Peet’s, the successful float leaves it with firepower for further acquisitions. It plans to use the proceeds to cut debt — it aims to reduce the leverage ratio from 3.6 times to below 3 times by the end of the first half of 2021 — but it gets an acquisition currency in the form of equity.Competition for coffee assets has been intense. There was a flurry of deals two years ago with JAB’s $2 billion purchase of Pret A Manger, which sells coffee as well as food to go; Coca-Cola Co.’s $5.1 billion swoop on Costa Coffee; and Nestle’s $7 billion deal for the rights to sell Starbucks coffee in supermarkets.But JDE Peet’s could get lucky here, too, particularly in the market for drinking coffee outside the home. With the lockdown-induced distress in malls and on main streets, it may be able to grab something to go for a better price.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Shares of retail-chain operator L Brands (NYSE: LB) were sharply higher on Thursday, after the company reported a wider-than-expected first-quarter loss and said that it will follow through on separating its troubled Victoria's Secret chain into a stand-alone company. As of 12:15 p.m. EDT, L Brands' shares were trading up about 16.2% from Wednesday's closing price. Consumer-discretionary investors were bidding up L Brands' shares on Thursday after the company said during its quarterly earnings call that it will go forward with its plan to separate its Bath & Body Works and Victoria's Secret chains into separate companies.
L Brands' (LB) first-quarter fiscal 2020 results were dismal on stores closures implemented in the wake of the coronavirus outbreak. The company calls off forward guidance.
Victoria's Secret's losses continue to plague parent company L Brands (NYSE: LB). L Brands' portfolio includes Victoria's Secret and its sister brand, Pink, as well as Bath and Body Works. In the first quarter of 2020, Bath and Body Works comps increased 41% while Victoria's Secret comps fell 13%.
L Brands (LB) delivered earnings and revenue surprises of -39.44% and -2.89%, respectively, for the quarter ended April 2020. Do the numbers hold clues to what lies ahead for the stock?
(Bloomberg Opinion) -- When private equity firm Sycamore Partners walked away from beleaguered lingerie chain Victoria’s Secret, some of the loudest gasps came from India, Asia’s busiest market for distressed assets.Acquirers felt emboldened to seek legal advice. Could they at least renegotiate prices by arguing that the coronavirus was a material adverse change? Also known as MAC, this is an unforeseen event that durably depresses the value of a target company.Judges usually set the bar high for allowing a deal to be killed because of MAC. In the Victoria’s Secret case, Sycamore argued that the clause had been triggered because current owner L Brands Inc. failed to pay rent and furloughed thousands of workers. The pandemic was “no defense” for L Brands violating terms of the agreement, the buyer said in its complaint in the Delaware Chancery Court.In the U.S., Mirae Asset Global Investment Co. is pleading that Anbang Insurance Group Co. breached the terms of its $5.8 billion hotel chain sale by shuttering properties. That the closures came in response to the outbreak is “irrelevant,” Mirae said in court papers. A unit of Anbang (now known as Dajia Insurance Group) has sued to force the Korean investor to complete the transaction.The MAC risk has come to M&A globally, with 52 publicly filed agreements in the U.S. so far this year excluding pandemics from the definition of material adverse change, the highest in any year, according to Bloomberg Law analyst Grace Maral Burnett. As she explains, a longer list of exclusions typically helps sellers by “limiting the situations in which the acquirer is able to walk away from a deal.”These moves and lawsuits are being watched closely in India. Creditors seeking to recover something from hundreds of billions of dollars of soured corporate loans are nervous. Successful bidders may try to use the pandemic to wriggle out of commitments — or stall payments. Buyers are wary of overpaying for assets whose future earnings potential may have been permanently damaged by Covid-19 and the ensuing lockdowns.For buyout firms, the clock is ticking. They have raised money globally to pick up an interest in the debt of stressed Indian businesses. India’s 2016 bankruptcy law brought them to the country. Long delays in concluding large transactions, like the $5.9 billion sale of Essar Steel India Ltd. to ArcelorMittal, weren’t unexpected, but they did eat into the typical seven-year life of a fund.If wranglings around MAC drag on in tribunals and courts, India’s appeal may fade amid an oversupply of distressed assets everywhere. More than $38 billion in defaulted Indian loans are awaiting resolution, according to an analysis of 245 cases by restructuring services firm Alvarez & Marsal.A yearlong suspension of new bankruptcy filings ranks among the relief measures recently announced by the government of Prime Minister Narendra Modi. The logic is easy to see. Even before the pandemic, only one or two bidders were showing up in small in-court bankruptcies. With the economy in a tailspin — Goldman Sachs Group Inc. forecasts it will shrink an annualized 45% this quarter — the ratio of four liquidations to one corporate rebirth will balloon. A quarter of the workforce is without jobs. A further spike in unemployment could ignite social strife. Yet by acknowledging that the pandemic merits special treatment in bankruptcy, India may have unwittingly shown buyers a way out.So far, there’s only one reported case of an Indian company citing the lockdown to renegotiate a bid, involving the sale of a small auto-parts maker. Large acquirers are hesitant. No one wants to be first to tell creditors they want to pay less: Lenders would seek to get the errant buyer barred from future auctions. The government might not take kindly to such moves, either. State-owned banks are carrying the can of dud loans; the less the buyers put up, the higher the taxpayers’ burden. However, if there’s a barrage of bankruptcy litigation — for instance, around the Covid-19 related debt the government says will be excluded from the definition of default — then those seeking to use MAC to renegotiate or stall may quietly join the slugfest. In light of the pandemic’s extreme impact, “there may be circumstances” in which a court might find a material adverse change occurred when it wouldn’t have under more normal conditions, M&A counsel Gail Weinstein of Fried, Frank, Harris, Shriver & Jacobson LLP and others wrote in a Harvard Law School article last month.Buyers in India’s distressed market are hoping for just this outcome. Lawyers are tingling with anticipation. Banks are dreading it. And investors who bought defaulted debt are praying that any fresh proceedings will be conducted swiftly, on merit, and won’t end up derailing the bankruptcy gravy train. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
What happened Shares of several retail-chain operators were rising on Monday, amid a broad-based market rally as investors grew more optimistic about the development of a COVID-19 vaccine. Here's where things stood for these four companies' stocks as of 12:15 p.
L Brands' (LB) first-quarter top line is likely to reflect soft sales of Victoria's Secret brand on account of stiff competition and consumers' changing preferences.
There was a good case to be made that L Brands (NYSE: LB) could become a growth business once again if it just unloaded the ailing Victoria's Secret lingerie business and focused instead on its candle and hand soap operations. After thinking it had off-loaded most of that albatross onto private equity firm Sycamore Partners, the coronavirus pandemic erupted, upending its plans and sending the two companies to court over completing the deal. In its place, the retailer is substituting a plan to completely spin off Bath & Body Works and turn Victoria's Secret into a viable business again.
Abandoning its efforts to salvage the deal through legal action, L Brands (NYSE: LB) said yesterday it agreed to terminate the sale of a controlling interest in Victoria's Secret. The acquisition, originally giving private equity firm Sycamore Partners a 55% stake in the lingerie brand, represented a chance for L Brands to divest Victoria's Secret in exchange for $525 million in cash. Sycamore Partners emerges from the situation nearly unscathed, paying neither the original price agreed upon nor a termination fee.
Stocks rose after a choppy session a day earlier, as investors weighed a plethora of developments impacting the health, economic, corporate profitability and geopolitical implications of the coronavirus pandemic.
(Bloomberg Opinion) -- Victoria’s Secret may have ditched its opulent fashion show, but its parent L Brands Inc. can’t get rid of the troubled lingerie retailer quite so easily.The retailing group said late Monday that it had reached an agreement with Sycamore Partners to terminate a transaction that would have seen the private equity firm acquire 55% of Victoria’s Secret for $525 million, taking it largely off L Brands’ hands. Sycamore had struck the deal in February, heralding the end of an era for the once-revered retailer. But last month it sought to terminate the arrangement and filed a complaint in the Delaware Chancery Court alleging that actions taken, such as furloughing staff and failing to pay rent amid closures forced by the coronavirus pandemic, had reduced the value of its prospective purchase. L Brands described the move at the time as “invalid” and said it would seek to enforce the agreement, so its standing down now is an about-turn. Renegotiating the transaction at a lower price would have been preferable to an outright end to deal hopes, but at least the sorry affair is now over. However opportunistic Sycamore’s suit, fighting it would have been expensive and time-consuming. L Brands can now move on, without significant outlay and too much dirty lingerie aired in public. Even so, the outcome is far from ideal. Sycamore and L Brands — it would have retained a minority stake — would have had a tough enough time turning around Victoria’s Secret even before Covid-19 forced chains to close swaths of stores and decimated consumer confidence. Now L Brands must do it alone, in the full glare of investors and against a much worsened retail backdrop.Victoria’s Secret was already suffering from sliding sales and an outdated image. Its sexy aesthetic is increasingly out of sync with consumer tastes, while it now must contend with a raft of competitors serving them better with a broader range of styles and suited to different body shapes.The chain’s sales were $6.8 billion in the year ended Feb. 1. This year, with the pandemic wreaking havoc on the industry, both sales and profits at Victoria’s Secret will no doubt take a hit. For L Brands as a whole, Poonam Goyal, analyst at Bloomberg Intelligence, estimates that sales could be down between 32% and 69% in 2020.L Brands still wants Victoria’s Secret to be a stand-alone company so it can concentrate on the more successful Bath & Body Works. With a separation, the group may be hoping to attract another buyer, but the fact that the Sycamore deal valued a division with close to $7 billion of sales at an enterprise value of just $1.1 billion, the acquirer’s subsequent attempts to extricate itself, and the dismal retail environment all make that unlikely for now.With no buyer forthcoming, the top priority will be to reinvigorate Victoria’s Secret’s image. A store footprint of about 1,100 locations in North America also needs to be tackled. The large-scale and permanent shutterings that L Brands has avoided up to now look unavoidable.These undertakings will be expensive, and L Brands already has long-term borrowings of about $5.5 billion. The sale — even at a lower price — would have helped to reduce this. The group also retains Victoria’s Secret’s store lease obligations, which analysts at Bernstein estimate at about $2.5 billion. There are no bond maturities this year, which is helpful, but some $450 million is due in about a year’s time.And L Brands needs to improve Victoria’s Secret while keeping Bath & Body Works flourishing. That chain may have enjoyed a boost to sales of items such as hand sanitizer, but it won’t have escaped the effects of store closures. And, as I have noted, it will take some time for consumers to return to malls. All that’s as tricky as strutting a catwalk in towering heels and adorned with giant feather wings.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Even as some retailers begin to open stores again, the pain across malls and main streets continues to take its toll.J. Crew Group Inc. on Monday said it would begin pre-arranged Chapter 11 bankruptcy proceedings and enter into a $1.65 billion debt-for-equity swap with its lenders, becoming the first major U.S. retailer to succumb to the economic convulsions caused by the coronavirus pandemic. It won’t be the only casualty. Other chains are grappling with the same issues: heavy debt loads, compounded by the damage done from locations closed for weeks. Neiman Marcus Group Inc. is closing in on a bankruptcy deal with a group of lenders, Bloomberg News reported on Monday, citing people with knowledge of the matter, and J.C. Penney Co. is reportedly in talks on a loan that would fund it through a restructuring. Meanwhile, Victoria’s Secret-owner L Brands Inc. said late Monday that it agreed to terminate plans to sell a majority stake in the lingerie chain to private equity firm Sycamore Partners. Jefferies analyst Randal Konik had warned last month of potential medium-term solvency issues at L Brands after Sycamore sued to get out of the transaction, citing a collapse in sales and looming debt maturities.Every brand has its own story. In the case of J. Crew, it was one of the first mainstream U.S. retailers to gain real traction with the fashion crowd, and in its heyday was also ahead of its time in areas such as store design. The leadership of former chief executive Mickey Drexler and creative director Jenna Lyons took its preppy styles from classic to cutting edge, all helped by the brand being a favorite of Michelle Obama. But its trendy designs eventually alienated some customers, and when the power partnership came to an end in 2017, it never regained its stride. With cheaper competitors such as Inditex’s Zara and a resurgent Ralph Lauren Corp at the top end, J. Crew had to rely on incessant discounting.J. Crew had hoped in recent months to spin off its faster-growing, denim-focused Madewell arm as it sought to cut borrowings of almost $1.7 billion as of February. But plans for the initial public offering were scuppered by the pandemic, and it was left struggling to deal with its debt, a legacy from its 2011 leveraged buyout by TPG Capital LP and Leonard Green & Partners LP.Neiman Marcus, meanwhile, was acquired in a $6 billion leveraged buyout by Ares Management LLC and the Canada Pension Plan Investment Board almost six years ago. The chain has been in a race with its luxury rivals, such as Nordstrom Inc. to turn stores into temples of indulgence. That all takes investment, made harder with a debt load of $4.3 billion, according to Bloomberg News. J.C. Penney is at the other extreme. It must deal with shabby stores as it struggles to stay relevant while managing total borrowings of $3.6 billion excluding store leases as of Feb. 1.All three chains are facing pressure from online rivals. For J.C. Penney, that’s Amazon. For J. Crew and Neiman, it’s the likes of Richemont’s Net-a-Porter. The latter two are no laggards to online themselves, so this challenge should be manageable. Their capital structures, however, are proving more of a hurdle.Some stronger groups, including Gap Inc., have tapped the credit markets. In the U.K., a number of retailers such as Asos Plc, have turned to shareholders. American chains may follow suit. But the steep falls in many retailers’ share prices may make that difficult. A buyer also can’t be ruled out for Neiman or J. Crew, which will continue to trade after also reaching agreement on $400 million of financing. After all, both have recognizable brands. But with valuations uncertain, a rescuer can’t be counted on either.While the lockdown, and likely tepid recovery is most worrying for those companies with fragile finances, stronger chains will also emerge weaker. Gap, for instance, revealed that with physical stores shuttered, it would burn through half of its cash pile in less than two months, eroding its financial position at a time when it was seeking to revive its core Gap brand.Gap had $1.25 billion of long-term debt as of Feb. 1, less than one times its Ebitda of $1.6 billion and seemingly manageable. But with the pandemic, cash reserves — which stood at $1.7 billion on Feb. 1 — have dwindled to an estimated $750 million to $850 million as of May 2.After the struggle to survive, there will be little left over to invest, a problem when consumers are likely to be even more discerning and addicted to online shopping. So for those retailers that do make it through the crisis, prospering afterwards will be another thing entirely.(Updates third paragraph to show Neiman Marcus is close to a bankruptcy deal, and L Brands terminated a sale of Victoria’s Secret.)This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Shares of the Columbus, Ohio-based L Brands fell 11% in extended trading. The company said instead it was preparing to operate Victoria's Secret as well as its personal care brand Bath & Body Works as separate, standalone units. L Brands said it was in its best interests to focus on navigating an extremely challenging business environment rather than engaging in costly and distracting litigation to force a partnership with Sycamore.