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Ladies and gentlemen elber in stock has absolutely fallen through the floor here today the stock has absolutely crashed down over 13% today down over four dollars and twenty four cents a share absolutely horrible day as you know two weeks ago i post a video on this channel explaining why my wife and i sold out of our l brand steak a hundred percent we went into all
The details behind it and why we decided to make that decision i got some hate on that video some people saying well you just start buying those shares five six months ago you’re supposed to be a long-term investor why not hold those long-term well the bottom line is in the name of the game whether you’re value investing or any investing in across the board long term
Investing the name of the game is to buy companies you feel are good value okay and so those companies when you feel there are no longer a good value and it’s it doesn’t matter if you’re up of those shares down on those shares anything across the board if you feel the company is not a good value if you feel like things above management teams not know performing up
To expectations they’re making bad decisions the name of the game is sometimes you just got to get out of shares and that’s what i had to do without brands and after today i’m very very happy so what i want to do is i want to go through some shocking information with you guys here today i also want to talk about there’s one really good piece of news i did come out
On this quarterly earnings okay and i want to talk about whether i am planning on buying back to my shares now that they have crashed you know much much worse there at around a six-year low rate now so the lowest of stocks been in six or seven years i want to talk about if i’m going to buy my shares back or anything like that or if i might short the shares so let’s
Get into those guys first let’s look at these numbers actually reported so l brands a parent of victoria’s secret and bath and bodyworks on wednesday lowered its profit outlook which overshadowed the fact that they had beat numbers for this past quarter the company said it now expects full-year earnings per share of between two dollars and 45 cents in two dollars
And 70 cents down from a previous forecast of two dollars and seventy cents to three dollars a share that’s the second time this year the company has lowered expectations guys the second time this year for the third quarter elbrun said it expects earnings per share between 0 cents so breakeven in five cents analysts polled had expected around 16 cents of eps so
That’s the second time they’ve had a you know say we’re gonna make less money than we thought there we were gonna in the same exact year guys that’s a really bad look when you u.s. management have to say well things are getting even worse than we expected oh and things are getting even worse twice in a year that’s a really really bad thing guys let’s look at the
Numbers actually report it for this past quarter they weren’t too bad they beat slightly so earnings per share came in at 36 cents versus 34 cents was expected revenue was a very slight beat there came in at two point nine eight billion versus two point nine three billion was expected there’s one piece of good news here if there’s a piece of any of the good news
Here even as old brands is looking to turn around it’s victoria’s secret lingerie brand it has a new headache on its hands it’s teen counterpart pink the owner of victoria’s secret pink have been bath and body works said wednesday night is reducing its full-year earnings as we just talked about due to weakness in the pink brand which was actually you know a brand
That was doing decent for a little while their growth in sales at comparable stores for the team focus label declined single-digit to mid digits in the second quarter company executives told on the earnings conference call on wednesday evening the company announced the retirement of pink ceo denise landman amy hawk who’s a president for merchandising in product
Development not bath and bodyworks will replace her on october 1st there okay so real quick just looking at from the perspective of they need a lot of turnover in the victoria’s secret side and pink brand in my opinion they need a lot of management changes there a lot of you know management just has not done a good job with those brands they’ve just been declining
Declining and declining and you maybe need to shake things up the what the only good thing about l brands that’s holding the whole company together and from this being a $15 stock right now is honestly the fact that bath & bodyworks numbers have been extremely strong so i bring in one of the top executives of the bath & bodyworks side onto the pink’s pink
Side maybe they can help reinvigorate sales but also we got to keep in mind even though these are two very women focused businesses right bath & bodyworks and also you know pink and victoria’s secret at the same time we got to understand one sell soaps and lotions the other one cells you know underwear and bras and some clothing items and things like that so
There are two very very different businesses although both are folks so just because this lady’s coming in to replace the old one who wasn’t doing too good of a job it doesn’t mean that this is a fix for the company or something like that or you shouldn’t look at it from the perspective oh you know this is this is magically gonna change i have a lot of questions
About lex wexner okay he’s the one that found in this company built into a massive beast over the years did a phenomenal job with the business for such a long time he’s gonna be 81 years old here soon and i’m not sure he’s really running this business very well anymore okay he’s still ceo of the overall company chairman of the board and i don’t think he’s doing a
Very good job at all guys let’s just look at it from this perspective this is shocking to me okay so if we look at dividends paid out in the past two quarters along with what is expected to be paid out in this current quarter they paid out 60 cents 60 cents and they’re expected to pay out another 60 cents that’s a dollar and 80 of basically dividends paid out per
Share in the patent past two quarters plus this upcoming quarter right now if we look at what they had for earnings per share in the last two quarters plus what they expect to do this upcoming quarter and by the way i took the best case scenario they said they’re expected to do breakeven to five cents so i wouldn’t their best case scenario of making five cents right
They did seventeen cents thirty-six cents and five cents that’s fifty eight cents of earnings per share okay but they paid out a dollar eighty so they paid out over triple up in dividends of what this company has made in profits basically it’s gonna be making in profits all right this is a really really bad sign you can say well maybe they’re gonna have a huge
Christmas quarter and that will help offset this maybe that it is possible but at the same time this is just a bad look you pay out sixty cents you only made seventeen cents of eps okay you pay out sixty cents of eps you only made 36 cents okay this means you’re funding all of this these payouts here with the debt and that’s a really bad thing when you’re funding
All this with debt it’s such a short-term focused thing okay and we see lex wexner coming up in 81 years old i’m not convinced he really has a name or maybe he doesn’t really care about this business anymore he’s like i just want to get all the money all the profits paid out to me in dividends for whatever reason i have a lot of questions about this guy at this
Point in time you know he’s done a phenomenal job with the company in the past but he is he is refusing to make the decisions that that need to propel the company for it okay they know that all this money paid out right they could be using all these profits to fundamentally change a business or buy other businesses that help their business expand over time okay
They can be doing all that think about all the brands they they bought over time that they’ve helped you know expand all around the world they could be do using that money for that but instead they decide we’re just we don’t know what to do with the money and we’re just gonna pay it out in dividends but then worst part is if taken out debt really tight end up paying
This dividend guys they’re not even making the eps to pay that to pay out the dividends this is the most this is a worse run management team in my personal opinion other than go pro in inc honestly it’s just a disaster they don’t some great brands but just because you own great brands i’ve done well in the past does it not mean you’re gonna you’re gonna make them
Great into the future because if you’re paying all your money and dividends what do you have to left to reinvest in the business guys this is a fundamental case on why i sold out this is also a management team who tries to give an optimistic tone but every single quarter what do we see them missing numbers consistently or what the end up having to do is take down
The full-year guidance okay so is one of the that’s one of the other pretty much every quarter either they’re missing numbers bad or they’re having to take down numbers for the rest of the year that’s what happens every single quarter with this company okay so this is a management team totally focused on a short-term if this was a long-term focused management team
They would say you do our business is in trouble right now screw the dividends screw it we’re not paying out any more dividends okay we’re a bit of profit we’re gonna we’re gonna make on the office business we’re gonna reinvest it back into the business okay so let’s say they have a banner you know christmas corner and let’s say this somehow full-year they end up
Doing you know two dollars and 40 cents or whatever of eps or maybe two dollars and fifty cents of eps okay great what they should be doing is they should be following every single penny of that money back into the business either to pay off debt or to buy other new businesses right or to just fundamentally change their business platforms in a big way which they
Are refusing to do but what are they deciding to do they say well every bit of every penny that’s comes in through the door we’re gonna end up paying out this year in dividends it’s such a poor management team there so the question is the stock has dropped big here it might continue to drop it might drop to 25 we don’t know where the stock is going in the short-term
I’ll never you know pretend i know where a stock is going in the short-term i’m no clue where that stocks going in the short-term but it could be a $25 stock here before you know so the question is am i looking at all brands as a position where i’m like i want to get back in that one now that it’s dropped even a ton more the answer is no i do not planning jumping
Back in l brands i would have to see focus from the management team the executive team the board of directors to really want to you know have this business be around in 10 or 20 years i’m not even convinced this is a business that will be around in 10 into 10 or 20 years strictly from the fact that management refuses to funnel money into reinvesting back in the
Business and just pays out and shareholders could think about it this way the death of a retailer what ends up happening is you get to loaded up on debt which means you’ve got to make a ton of interest payments and sometimes when times aren’t as good guess what you have to take out more debt with higher interest rates you have to end up paying on that money and then
Guess what ends up happening even though maybe you’re making profits on the business more than that’s all going out to pay off the debt and the interest rates on the debt okay so what i see is this being a potential to happen with elgrands unless they fundamentally change their thinking unless they cut this dip it and they say dude we’re gonna invest everything back
In this business we’re in trouble right now the fact is ml brands management team and board directors doesn’t realize they’re in trouble right now okay the facts behind this company say this company is in trouble right now everything is on the decline for this company except that the body works at once again that’s the only thing holding the stock right now at its
Level it would be a $15 stock or $10 stock if it wasn’t for bath & bodyworks management team is delusional here until they focus until they focus anything this aint dude we’re who are in trouble here we need to get back focused on the business screw paying out dividends until i see that from the business i don’t care i don’t care how great these brands are i
Don’t care how great this company was historically run until they make the decisions the hard decisions to focus on long term versus focus on short term this is not a stock i will own it’s a stock i continue to track as tracking on stock tracker or look at his stock price you know every other day pretty much and i’ll continue to keep up to date with his business
And i might buy back shares someday but until i see real focus from the management team on dude we’re in trouble we need to focus this business for the long term we need to make sure this company is here for two decades in the future is three day until we see that from this company it’s not a stock i will own regardless of what the p/e goes down to and keep in mind
Right there right you can look at this talk and say well it’s a really low p/e well remember two times just this year they’ve already taken down there eps estimates which means you might have thought you were getting a stock in a 10 pe but maybe you were getting a stock at a 12 pe and maybe next year they only make two dollars a share and maybe in the following
Year a dollar 50 and then also it looks like wow this company is getting worse and worse we’re gonna have to see where the company goes over time but i’m just telling you a company that’s focused on short-term like this company is it generally does not end well when you look at it from from a five to ten year perspective so i’m happy i got out of this stock i’ve
No plans to get back in unless of course i really saw a fundamental change in the management team which we haven’t seen any fundamental change in the management team as of right now so that’s where i’m at with that one guys let me know what your opinion is down there in that comment section whether you’re bullish bearish on the stock or if there are any stocks
Out there you guys are making moves with any stocks you’re out there buying or selling let me know also you know what do you think about this management team like like i would love to hear your guy’s opinion down there in that comment section as always if you love keeping up with stock market news make sure you follow me on instagram i always post a ton of stock
Market news i’m paying attention to and what not in my instagram stories thank you for watching have a great day
Transcribed from video
LBRANDS STOCK CRASH. I COULD HAVE LOST $5000 By Financial Education
