Fitch cuts, withdraws L Brands

Fitch Ratings said it downgraded L Brands, Inc.'s long-term issuer default rating to BB from BB+ and withdrew all of the company's ratings.

The agency said the downgrade reflects reduced confidence in the company's ability to stabilize negative store traffic trends and increased promotional activity at Victoria's Secret, yielding leverage remaining above historical averages.

EBITDA declines driven by Victoria's Secret's weakness have caused projected 2018 adjusted leverage to rise to around 4.4x from the mid-3x average since the recession, Fitch said.

The agency said that while L Brands has a long-term track record as a strong operator of two leading brands and has historically driven growth despite challenges in the broader retail space, Fitch expects the recent brand challenges at Victoria's Secret to persist over the next two to three years.

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