。
She is carrying a bag under her arm.
Literal
She [topic-は] armpit [at-に] bag [object-を] is-holding.
脇の下 (わきのした, literally 'under the side') means 'armpit/underarm.' 抱える (かかえる) means to hold something in one's arms or carry it tucked against the body — a specific verb for how bags, boxes, or bundles are carried. The polite ~ています marks an ongoing state.