By Christiana Sciaudone
Investing.com - Less skin, more skin-care.
L Brands (NYSE:LB) soared as much as 39% on Wednesday, a day after the Victoria's Secret owner revealed an aggressive cost-cutting plan and said its Bath & Body Works unit actually grew last quarter as customers pampered themselves while stuck at home.
Shares are trading at about $25.84, having tripled since March.
The company will cut 850 corporate jobs, of 15% of its workforce, which will contribute to an expected $400 million in annualized cost reductions. About 250 Victoria’s Secret stores will close in 2020.
The company is breaking up the band, with Bath & Body Works become a pure-play public company and the Victoria’s Secret family operating as a standalone group.
L Brands said net sales for the second quarter are expected to be down approximately 20% compared to last year, including an increase of roughly 10% at Bath & Body Works and an approximate 40% decline at Victoria’s Secret.
Most Bath & Body Works and Victoria’s Secret stores in North America have reopened, and sales at both businesses have been strong and have exceeded the company’s expectations.
Analysts are celebrating.
B.Riley FBR analyst Susan Anderson reiterated a buy rating with a price target of $24, Briefing.com said. L Brands has eight buy ratings, five holds and one sell, with an average price target of $18, according to analysts tracked by Investing.com.
CNBC reported that JPMorgan (NYSE:JPM) upgraded the company saying that the risk/reward was “hard to ignore.”
BMO Capital Markets analyst Simeon Siegel said L Brands will be much healthier as it becomes leaner, according to CNBC.
“It’s a classic example of a brand that stretched too far in pursuit of growth,” Siegel said. “But its revenues are the confirmation it still has tremendous buy-in from consumers.”
The company will report its second quarter earnings results on Aug. 19.