L Brands (LB) Reports Fourth Quarter 2020 Earnings Exceeded Earnings Expectations

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

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Victoria’s Secret parent company L Brands reported fourth-quarter earnings on Wednesday that beat analyst estimates, but sales fell short due to weakness in its lingerie brand.

Although the retailer does not offer a full-year outlook, due to the uncertainty surrounding the pandemic and the pending separation of its Victoria’s Secret brand from Bath & Body Works, it provided an optimistic first-quarter earnings outlook, saying it was is building. on the boost he saw over the holidays. He said sales have been strong so far in February.

Shares of L Brands rose about 5% in after-hours trading.

Here’s how the company fared during its fourth quarter ended January 30 compared to what analysts had expected, according to Refinitiv data:

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

L Brands posted net income of $ 860.3 million, or $ 3.03 per share, compared to a loss of $ 192.3 million, or 70 cents a share, a year earlier. The results beat analysts’ forecast of $ 2.91 per share.

Net sales grew to $ 4.82 billion from $ 4.71 billion a year ago. That was below the $ 4.87 billion analysts expected.

Same-store sales increased 10%, better than the 6.7% increase predicted by a Refinitiv survey. Within that, Victoria’s Secret same-store sales fell 3%, but the decline was offset by 22% same-store sales growth at Bath & Body Works.

The company has been able to increase its profitability by drastically reducing inventory levels and selling more items at full price. Relying less on discounts to attract buyers, L Brands said it saw a significant improvement in both average unit prices and merchandise margin rates during the fourth quarter.

For the first quarter, L Brands is asking for earnings per share to fall within a range of 35 cents to 45 cents. That’s ahead of analyst estimates of 12 cents a share.

It expects first-quarter sales to remain virtually unchanged compared to 2019 levels, at $ 2.6 billion. Once again, Bath & Body Works will see stronger growth, while sales remain pressured at Victoria’s Secret due, in part, to continued store closures.

Management also said in prepared remarks Wednesday that L Brands is still moving forward with its plans to separate Victoria’s Secret from Bath & Body Works, which it expects to complete in August.

“Over the next 6 months, we will continue to work towards the separation of the two businesses, following a dual path to prepare for a spin-off or a sale,” the company said.

L Brands had struck a deal to sell Victoria’s Secret last year to private equity firm Sycamore Partners. But the $ 525 million deal fell through as the pandemic temporarily shut down the retailer’s physical stores.

Victoria’s Secret has been trying to revive its brand, which sells everything from lingerie and perfumes, to pajamas and loungewear, as consumers have increasingly turned to bras and underwear with more inclusive marketing messages.

L Brands is scheduled to hold a conference call with analysts Thursday morning to discuss the latest results.

Its shares are up 119% in the past 12 months at the close of the market on Wednesday. L Brands has a market capitalization of $ 14.36 billion.

Find the full press release from L Brands here.


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