L Brands, Inc. operates as a specialty retailer of women's intimate and other apparel, beauty and personal care products, and accessories. The company operates in three segments: Victoria's Secret, Bath & Body Works, and Victoria's Secret and Bath & Body Works International. Its products include loungewear, bras, panties, swimwear, athletic attire, fragrances, shower gels and lotions, aromatherapy, soaps and sanitizers, home fragrances, handbags, jewelry, and personal care accessories. The company offers its products under the Victoria's Secret, PINK, Bath & Body Works, La Senza, Henri Bendel, C.O. Bigelow, White Barn, and other brand names. L Brands, Inc. sells its merchandise through company-owned specialty retail stores in the United States, Canada, the United Kingdom, and Greater China, which are primarily mall-based; through its Websites comprising VictoriasSecret.com, BathandBodyWorks.com, HenriBendel.com, and LaSenza.com; and through franchises, licenses, and wholesale partners. As of January 28, 2017, the company operated 2,755 retail stores in the United States; 270 retail stores in Canada; 18 retail stores in the United Kingdom; and 31 retail stores in the Greater China area. It also operated 203 La Senza stores in 24 countries; 159 Bath & Body Works stores in 30 countries; 23 Victoria's Secret stores in 12 countries; 391 Victoria's Secret Beauty and Accessories stores in 70 countries; and 5 PINK stores in 3 countries. The company was formerly known as Limited Brands, Inc. and changed its name to L Brands, Inc. in March 2013. L Brands, Inc. was founded in 1963 and is headquartered in Columbus, Ohio.
Business Analysis of L Brands
The Retail Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how L Brands compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by L Brands to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of L Brands with an interactive chart.
- Revenue Growth: L Brands reported a revenue growth of 6.1% year-on-year during 2016. Apparel Retail Industry grew at 5.0% in the same period
- COGS share of Revenues: As a percentage of revenue, L Brands spent 57.2% of its total revenues on COGS. Apparel Retail industry average (COGS share of revenue) in the same period was 62.3%
- R&D share of Revenues: L Brands R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, L Brands spent 24.8% of its total revenues on Sales, Marketing, and General Administration (SG&A). Apparel Retail industry average SG&A spending in the same period was 27.0%
- Inventory share of Revenues: As a percentage of revenue, L Brands spent 9.2% of its total revenues on Inventories. Apparel Retail industry average Inventory spending in the same period was 14.4%
- Accounts Payable share of Revenues: As a percentage of revenue, L Brands invested 5.5% of its total revenues on Accounts Payable (A/P) Apparel Retail industry average Accounts Payable investment in the same period was 7.0%
- Accounts Receivable share of Revenues: As a percentage of revenue, L Brands invested 2.1% of its total revenues on Accounts Receivable (A/R). Apparel Retail industry average Accounts Receivable investment in the same period was 1.5%
- PP&E share of Revenues: As a percentage of revenue, L Brands invested 19.2% of its total revenues on Property, Plants, and Equipments (PP&E). Apparel Retail industry average PPE investment in the same period was 17.6%
- Intangibles share of Revenues: As a percentage of revenue, L Brands invested 14.2% of its total revenues on Intangibles. Apparel Retail industry average Intangibles investment in the same period was 4.9%
- Net Margins: L Brands Net Margins in the year 2016 were 10.3%. Apparel Retail industry average Net Margins in the same period were 5.2%
Sector and Industry Association of L Brands
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
L Brands is associated with Retail Sector and Apparel Retail Industry.
Retail sector is comprised of the following industries: Broadline Retail; Grocery Retail; Specialty Retail; Apparel Retail; Home Improvement Retail; Specialized Consumer Services. The definitions for each of the industries is as follows:
- Broadline Retail industry includes retail outlets and wholesalers offering a wide variety of products including both hard goods and soft goods.
- Grocery Retail industry includes retail stores that primarily offer non-perishable food that is packaged in cans, bottles and boxes, with some also having fresh produce, butchers, delis, and bakeries
- Specialty Retail industry includes retailers and wholesalers concentrating on a Single Class of Goods, such as electronics, books, automotive parts or closeouts. It also includes automobile dealerships, video rental stores, dollar stores, duty-free shops and automotive fuel stations not owned by oil companies.
- Apparel Retail industry consists of retailers and wholesalers specializing mainly in Clothing, Shoes, Jewelry, Sunglasses and Other accessories.
- Home Improvement Retail industry includes retailers and wholesalers concentrating on the sale of home improvement products, including Garden Equipment, Carpets, Wallpaper, Paint, Home Furniture, Blinds and Curtains, and Building materials.
- Specialized Consumer Services industry includes providers of consumer services such as Auction Houses, Day-care Centers, Dry Cleaners, Schools, Consumer Rental Companies, Veterinary Clinics, Hair Salons and providers of Funeral, Lawn-maintenance, Consumer-storage, Heating and Cooling installation and Plumbing services.
Industry Ranking of L Brands
With $12.2 billion revenues, L Brands ranked number 4 of all the companies in the US Apparel Retail industry. There were a total of 36 public companies in the US Apparel Retail industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Apparel Retail industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.