While I think it is at first glance a retail cycle recovery...

While I think it is at first glance a retail cycle recovery story, I am excited about the La Senza prospects over the next 3 years. La Senza will grow store numbers from 4 currently to 100 in 3 years? time, not immaterial in the context of SFH?s current 80-odd store population across the various brands.

Importantly, the gross margin on the La Senza merchandise is in the 60% to 70% range, I believe, and the store fit-outs are not overly capital-intensive. I also like the economically elastic demographic to which La Senza's freshness, hipness and funkiness appeal, namely women up to middle aged, a group that finds remaining current with the merchandise sold by La Senza universally important ("the one feminine luxury that is really an essential" is the way I describe it). And the distribution channel access via the relationship with sister brand, Victoria Secret (and its owner Les Wexner) is a very valuable one.

And the people running SFH I have a lot of faith in...I think they know how to sniff out ways to make money. Although Perlstein is remunerated a bit too generously for my liking, between Perlstein, Miller and Levy they own almost 35m shares (18% of the business), so they have plenty of skin in the game.

So I am excited about SFH (in case you can?t tell) not just for the rebound in the discretionary retail cycle, but for the three-year organic growth story and the gross margin enhancement that will accompany it.

Trading at less than 5x EV/EBITDA (at the bottom-of-the-cycle) and at a 6.7% DY makes is a sleep-easy-at-night investment for me.

Prudent Investing

Cameron