Fitch revises L Brands to negative

Fitch Ratings said it affirmed L Brands, Inc.’s long-term issuer default rating at BB+, senior secured credit facility at BBB-/RR1, senior guaranteed unsecured notes at BB+/RR4 and senior unsecured notes at BB/RR5.

The outlook was revised to negative from stable.

“The BB+ rating reflects L Brands' long-term track record as a strong operator of two leading brands, driving growth despite challenges in the broader retail space balanced with a shareholder-friendly posture,” Fitch said in a news release.

“L Brands has historically achieved strong customer loyalty and an ability to introduce compelling, unique merchandise in the lackluster mid-tier mall retail space.

“The negative outlook reflects Fitch's reduced confidence in the company's ability to stabilize negative store traffic trends and increased promotional activity at Victoria's Secret post recent strategic changes. EBITDA declines associated with Victoria's Secret's weakness have caused projected 2018 adjusted leverage to rise above 4.0x, which is Fitch's ratings downgrade sensitivity for L Brands.”

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