Home / Knowledge / News / Apparel/Garments / Fitch affirms L Brands IDR at 'BB+'
Fitch affirms L Brands IDR at 'BB+'
12
Apr '14
Fitch Ratings has affirmed the ratings for L Brands, Inc. (L Brands, formerly known as Limited Brands, Inc.), including the Long-term Issuer Default Rating (IDR) at 'BB+'. The Rating Outlook is Stable. 
 
KEY RATING DRIVERS
The affirmations reflect L Brands' strong brand recognition and dominant market positions in intimate apparel and personal care and beauty products, strong operating results, reasonable credit metrics and solid cash flow generation. The ratings also consider the company's track record of shareholder-friendly activities.
 
L Brands' strong business profile is anchored by its two flagship brands, Victoria's Secret and Bath & Body Works; a strong direct business; and a growing international footprint. The company's strong comparable store sales (comps) trends since the recession have been driven by relevant and attractive product offerings and a loyal customer base, although comps have normalized to low single digits in 2013 from 6% - 10% in 2011/2012. 
 
In addition to positive operating leverage from strong comps growth, the company has driven margin growth through efficient inventory and expense management. EBITDA margins in the 20%-range compare favorably to the broader retail average in the low teens.
 
Fitch expects that L Brands can sustain comps growth in the 2% -3% range and EBITDA margin to remain in excess of 20% over the next three years. This is underscored by strong comps growth in both the Victoria's Secret brand (approximately 62% of sales and EBITDA including the Victoria's Secret direct business) and Bath & Body Works brand (approximately 27% of sales and 32% of EBITDA). Fitch expects the growth of PINK in the U.S. (which could double over the next few years from nearly $2 billion currently) and international expansion, if executed successfully, could drive top line growth in the mid-single-digit range.
 
Lease-adjusted leverage stood at 3.5x as of Feb. 1, 2014. Fitch expects the company to maintain a leverage profile in the mid-3x range, and fund dividends and share repurchases with free cash flow (FCF) and potential debt issuances. The company's shareholder-friendly posture is a key constraint to the rating.

Must ReadView All

Textiles | On 7th Dec 2016

New Texprocil chairman bats for increased UPI adoption

Ujwal Lahoti, the new Cotton Textile Export Promotion Council...

RBI Governor Urjit Patel addressing a press conference. Courtesy: Youtube

Textiles | On 7th Dec 2016

Defying expectations, RBI keeps repo rate unchanged

Defying market expectations, the Monetary Policy Committee (MPC) of...

The new OJ 59/1 B. Courtesy: Karl Mayer

Textiles | On 7th Dec 2016

Karl Mayer unveils new LACE.EXPRESS model for apparel

Germany’s leading textile machinery firm, Karl Mayer, has launched a...

Interviews View All

Sanjay Yagnik
Maa Tex Speciality

‘We suggest reducing dosage of sizing chemicals to reduce sludge...

Saket Garg
Garg Corporation

The biggest challenge is lack of skilled workforce and competition from...

Sonia Agarwal
Whitenife

‘The terms eco-friendly and organic are common but everyone perceives them ...

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Karan Arora
Karan Arora

Bridal couture created with rich Indian heritage, exquisite craftsmanship...

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
December 2016

December 2016

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


Advanced Search