There is more to Victoria's Secret than the silk and lace underthings the Intimate Brands Inc. company is known for, institutional investors say.
While Victoria's Secret got plenty of attention for its recent Internet fashion show, analysts and portfolio managers say the Web offers a company like Intimate Brands real opportunities for added growth and profits.
Unlike some of the so-called .com stocks, Intimate Brands can immediately leverage the Internet into increased sales.
"The whole fashion show was a brilliant idea," said Drew Cupps, portfolio manager for Strong Capital Management Inc., Menomonee Falls, Wis., which owned 740,000 shares as of Sept. 30, according to the most recent information publicly available. The aggressive growth mutual fund Mr. Cupps manages has about 2.5% of assets invested in Intimate Brands.
"That's what you call pretty good marketing."
Mr. Cupps said Victoria's Secret represents the future for Internet profits.
"The whole idea of Internet stocks will slowly disperse and (become) a moot subject," he said.
Instead, the Internet will be available to all companies as a tool to use or not use, he said.
Intimate Brands is in a better position than most to profit from the Internet, because it has an established brand name that people can trust. Branding is important on the Internet because it doesn't allow consumers to actually hold the product, he said.
Donald A. Yacktman, president of Yacktman Asset Management, Chicago, agreed. "I think the Internet is ideally suited to a company like Intimate Brands," he said. Yacktman mutual funds owned 200,000 shares as of Jan. 31, according to its Web site.
Nonetheless, Mr. Yacktman took the recent interest in the company as an opportunity to pare back holdings, he said. (He declined to say how much.)
Even with Intimate Brands' price runup the week of the fashion show, its price-earnings multiple on expected 1999 earnings is less than its peers, said Scott Emerman, analyst with Harbor Capital Management Co. Inc., Boston. Harbor owned 953,000 shares as of Dec. 31, public records show.
In addition, another Intimate Brands company, personal care retailer Bath and Body Works, should have a strong first half in 1999, he said.
"We think the stock has a bright future," Mr. Emerman said.
