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L Brands shares rise on Victoria’s Secret owner’s earnings beat, strong first-quarter outlook


A buyer carries a buying bag whereas exiting a Victoria’s Secret Stores LLC retailer, a subsidiary of L Brands Inc., in New York, U.S., on Wednesday, Nov. 14, 2018.

Bloomberg | Getty Images

Victoria’s Secret mother or father L Brands on Wednesday reported fourth-quarter earnings that topped analysts’ estimates, however gross sales fell quick on account of weak point at its lingerie model.

Although the retailer is not providing an outlook for the total yr, as a result of uncertainty across the pandemic and the pending separation of its Victoria’s Secret model from Bath & Body Works, it offered an upbeat revenue outlook for the primary quarter, saying it is constructing on the momentum it noticed over the vacations. It stated gross sales have been strong thus far in February.

L Brands shares rose about 5% in after-hours buying and selling.

Here’s how the corporate did throughout its fourth quarter ended Jan. 30 in contrast with what analysts have been anticipating, primarily based on Refinitiv information:

  • Earnings per share: $3.03 vs. $2.91 anticipated
  • Revenue: $4.82 billion vs. $4.87 billion anticipated

L Brands posted web revenue of $860.Three million, or $3.03 per share, in contrast with a lack of $192.Three million, or 70 cents a share, a yr earlier. The outcomes topped the $2.91 per share forecast by analysts.

Net gross sales grew to $4.82 billion from $4.71 billion a yr in the past. That was wanting the $4.87 billion anticipated by analysts.

Same-store gross sales rose 10%, higher than the 6.7% improve forecast by a Refinitiv survey. Within that, Victoria’s Secret’s same-store gross sales dropped 3%, however the decline was offset by 22% same-store gross sales development at Bath & Body Works.

The firm has managed to spice up its profitability by slashing stock ranges and promoting extra gadgets at full value. By relying much less on reductions to lure in buyers, L Brands stated it noticed important enchancment in each common unit costs and merchandise margin charges throughout the fourth quarter.

For the primary quarter, L Brands is asking for earnings per share to fall inside a spread of 35 cents to 45 cents. That is available in manner forward of analysts’ estimates for 12 cents per share.

It expects first-quarter gross sales to be about flat in contrast with 2019 ranges, at $2.6 billion. Again, Bath & Body Works will see stronger development, whereas gross sales stay pressured at Victoria’s Secret due, partly, to ongoing retailer closures.

Management additionally stated in ready remarks Wednesday that L Brands remains to be forging forward with its plans to separate Victoria’s Secret from Bath & Body Works, which it expects to finish by August.

“Over the next 6 months, we will continue to work toward the separation of the two businesses, proceeding down a dual track to prepare for either a spin-off or a sale,” the corporate stated.

L Brands had struck a deal to promote Victoria’s Secret final yr to the private-equity agency Sycamore Partners. But the $525 million settlement fell aside, because the pandemic briefly shuttered the retailer’s brick-and-mortar shops.

Victoria’s Secret has been making an attempt to revive its model, which sells every part from lingerie and fragrance, to pajamas and lounge put on, as shoppers have more and more opted for bras and underwear with extra inclusive advertising messaging.

L Brands is about to carry a convention name with analysts Thursday morning to debate the most recent outcomes.

Its shares are up 119% over the previous 12 months, as of Wednesday’s market shut. L Brands has a market cap of $14.36 billion.

Find the total press launch from L Brands right here.



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