Victoria's Secret Parent Company Pops After Reporting Earnings

01:01 05/25/2019

L. Brands, LB  the parent company of Victoria's Secret, was exploding this week after announcing an earnings beat.

The company saw its shares pop 11% after-hours on Wednesday when it reported financial results that beat expectations. The company also raised the low-end of its earnings forecast for 2019.

L Brands had a beat in both revenue and earnings expectations, helped by the strength of its Bath & Body Works stores. Same-store sales at Victoria’s Secret continued to fall however, with the brand reporting a 5% drop.

For the quarter, L Brands reported earnings per share of 14 cents. This came in-line with estimates based on a survey of analysts by Refinitiv. Revenue at $2.63 billion was higher than the $2.56 billion that was expected. Same-store sales were flat versus a 1.3% drop.

L. Brands also said that it closed 35 and opened one company-owned Victoria’s Secret stores in the first quarter.

L Brands CEO Les Wexner earlier this month also sent an internal memo to employees saying Victoria’s Secret is “rethinking” its annual fashion show because network television is no longer the “right fit.”

Looking ahead, the company has raised the low-end of its earnings forecast for 2019 and now expects earnings to fall between $2.30 and $2.60 a share, up from its previous estimates of $2.20 and $2.60 per share.

CFO Stuart Burgdoerfer said on the earnings call, 'Our first quarter earnings per share of $0.14 were above our initial guidance of about breakeven, principally driven by a strong performance at Bath & Body Works and some favorability in income taxes. Performance at Victoria's Secret Lingerie, PINK, Victoria's Secret Beauty and International were largely in line with our forecast. Our performance continues to be mixed, substantial growth in operating income at Bath & Body Works and an improvement in the other segment as a result of the sale of La Senza and the closure of Henri Bendel was offset by a decline in Victoria's Secret.'

He also said, 'Our outlook for the remainder of 2019 at Bath & Body Works and aligned experienced leadership team and strong customer response to our merchandise assortments are contributing to another solid year. We also remain highly focused on improving performance in the Victoria's Secret and PINK businesses. John Mehas and Amy Hauk, CEOs at Victoria's Secret Lingerie and PINK respectively, are focused on getting closer to our customers and improving our merchandise assortments.'

He added, 'We look forward to our assortments benefiting from their input beginning in the fall season, and our earnings guidance assumes gradual improvement in the Victoria's Secret segment performance as we move through the remainder of 2019. You will hear more from John and Amy as well as other business leaders at our Investor Day, which is scheduled for September 10th.'


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