The closing of Henri Bendel is a loss for buyers but could generate gains at L Brands

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The announcement that the department store Henri Bendel will close in January 2019 after 123 years of activity could make consumers cry, but analysts Wells Fargo say that L Brands Inc. is progressing on the path of growth

Shares of L Marques

KG, + 5.58%

, whose portfolio also includes Victoria's Secret and Bath & Body Works, finished Friday up 5.6% after the news.

L Brands has announced the closing of the 23 Henri Bendel stores, including the iconic New York location, and the closure of the e-commerce site after the holiday season of 2018. The decision is an effort to improve the performance of the company. The company, said L Brands CEO Leslie Wexner, said in a statement.

The company struggled with lowering its forecasts at the end of August for the second time this year. Same-store sales at Pink, a brand focused on university-aged women, are in the range of one-digit averages. And Victoria's Secret continued to feel the effects of its swim-out, as well as consumers switching to less expensive and less stuffed bras.

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L Brands shares have fallen nearly 52% since the beginning of the year as SPDR S & P Retail ETF

XRT + 0.23%

and the S & P 500 index

SPX, + 0.03%

increased by 14.6% and 8.7% respectively for the period.

"We view this initiative favorably because we believe that it reflects management's willingness to take a critical look at the company in view of the persisting weakness over several years," wrote Wells Fargo analysts. directed by Ike Boruchow. new measures to preserve future profits. "

Wells Fargo has highlighted a number of other ways in which the company could reduce its expenses, including an appraisal of its real estate, which includes more than 1,100 Victoria's Secret stores and more than 1,600 Bath & Body Works stores. in the USA; reduce the costs of key locations, such as the Bond Street location in the United Kingdom and the stores along Fifth Avenue in New York City; and take another look at the Victoria fashion show, aired on television, which has dropped in the ratings and, as a result, lost some of its commercial value.

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Analysts say they would like to see more moves like this latest announcement.

"Although Bath & Body Works continues to generate solid results (its strength needs to be praised) and we salute their recent announcement of Bendel, Victoria's Secret struggles do not seem to be moving forward and we would remain at home. away the troubled company, "wrote the analysts.

Wells Fargo L rates The brand equity market has a price target of $ 30.

Instinet says finding the problems with the Pink brand should be a priority.

"The management has not announced a pink growth since January, with a further decline in August," wrote the analysts in a note published on September 6. "With the company generating approximately $ 2.8 billion last year (~ 39% of Victoria's Secret revenues), brand health and understanding of downside risk are essential.

Instinet L Brands rate is neutral with a price target of $ 30.