Victoria's Secret Pain Points Look Flexible, Says Bernstein

Bernstein's Anne-Charlotte Windal maintained a Market Perform rating on L Brands Inc (NYSE: LB), while raising the price target from $93 to $95.

The company reported its 4Q15 results and provided its FY16 guidance on February 26. Windal noted, however, that L Brands did not provide an update on the leadership team at Victoria's Secret, following the departure of CEO Sharen Jester-Turney.

CFO Stuart Bergdoerfer stated Victoria's Secret is "well-positioned for growth [with a] highly talented team that is capable of leading the brand to continued success," the analyst reported.

However, Windal expressed positivity regarding the L Brands story, given the robust momentum into February, following the soft January comp at Victoria's Secret.

In fact, the analyst pointed out that "management still sees opportunity to reap benefits from increased speed-to-market in some categories, in particular Victoria's Secret Beauty."

In addition, the company intends to test five La Senza stores in the US during Fall 2016, with the first stores expected to open in November.

"Only "pain points" are Victoria's Secret Beauty and VSBA stores, and they appear fixable," Windal stated, while adding that "Victoria's Secret Beauty was down during the past holiday quarter, as the company's efforts to reposition the category have yet to pay off."

Although the repositioning is expected to be successful, it is likely to create a drag on comps for a few quarters.

The analyst expects EPS growth to remain constrained during FY16, while fundamentals continue to be robust and the guidance is likely to prove conservative.