The retail landscape has been witnessing an unprecedented turnaround with robust e-commerce adoption worldwide. Since businesses and individuals are choosing digital channels over physical stores to fulfill their consumption needs, businesses in in the retail sector that are focusing on their online presence should continue to outperform the broader market…
Investors’ confidence in retail stocks can be seen in ProShares Online Retail ETF’s (ONLN) 33.8% gains over the past three months versus the SPDR S&P 500 ETF Trust’s (SPY) 13.3% returns in the same period. And with more retailers transforming their digital operating models, the online retail business should gain even greater momentum this year and beyond.
With economic recovery as his main focus of 2021, President Joe Biden plans to rejuvenate consumer spending and boost business growth through direct fiscal stimulus. This should bode well for retailers like L Brands, Inc. (LB – Get Rating), Urban Outfitter, Inc. (URBN – Get Rating), and Citi Trends, Inc. (CTRN – Get Rating). These high-growth companies are well-positioned to grab more market share. So, we think it could be wise to bet on them right now.
LB is a specialty retailer of women’s apparel, personal care, beauty and home fragrance products. It operates through three segments – Victoria’s Secret, Bath & Body Works, and Victoria’s Secret and Bath & Body Works International. The company offers its products under the brand names Victoria’s Secret, PINK, Bath & Body Works, C.O. Bigelow, among others.
In December, LB appointed Julie Rosen as President, and Deon Riley as Chief Human Resources Officer at Bath & Body Works. This key leadership change should help support the company’s continued growth, as well as contribute to the development of compelling products across all categories.
Last November the company appointed Martin Waters as the Chief Executive Officer of Victoria’s Secret Lingerie, Laura Miller as the Chief Human Resources Officer of Victoria’s Secret, and Janie Schaffer as the Chief Design Officer of Victoria’s Secret Lingerie. Their vast knowledge and experience should help the company deliver success and grow profitable sales across international markets.
LB’s Bath & Body Works’ sales increased 54.9% year-over-year to $1.70 billion for the third quarter ended October 31, 2020. Victoria’s Secret direct sales grew 41.9% from the year-ago value to $470 million. The company reported an operating income of $580.6 million compared to an operating loss of $151.2 million for the quarter ended November 2, 2019.
The company’s total assets have grown at a CAGR of 12.6% over the past three years, while its levered free cash flow grew at a CAGR of 37.6% over this period. This reflects the company’s robust growth over the past few years.
A consensus EPS estimate of $0.03 for the next quarter ending April 31, 2021 represents a 103% improvement from the year-ago value. Also, LB beat the Street’s EPS estimates in three of the four trailing quarters, which is impressive. The consensus revenue estimate of $2.14 billion for the next quarter represents 22.9% growth from the same period last year. The stock has gained 80.7% over the past year.
LB’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. LB has a grade of A for Growth, Sentiment, and Quality. Of 67 stocks in the B-rated Fashion & Luxury industry, LB is ranked #3. In total, we rate LB on eight different components. Beyond what we stated above, we have also given LB grades for Stability, Value, and Momentum. Get all the LB ratings here.
Based in Philadelphia, Pennsylvania, URBN operates as a retailer and wholesaler of general consumer products, through retail, wholesale, and subscription segments. The company serves its customers directly through retail stores, as well as through websites, mobile applications, and digital businesses.
Last December, URBN promoted Melanie Marein-Efron, the company’s Executive Director of Corporate Development and Finance, to Chief Financial Officer. Her experience, dedication and thoroughness should help the company hit new highs in the near future.
URBN’s Urban Outfitters’ sales increased…
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