L Brands increases second quarter guidance
The company is now forecasting a second quarter earnings per share range of $1.20 and $1.30, compared to its previous guidance of $0.80 to $1.00. The company currently expects to report second quarter operating income of more than $400 million for the Bath & Body Works segment, and more than $200 million for the Victoria’s Secret segment.
The guidance increase was principally driven by higher than forecasted merchandise margin rates, as strong customer response to merchandise assortments and disciplined inventory management enabled a reduction in promotional activity.
While second quarter 2020 sales were negatively impacted by store closures due to the Covid-19 pandemic, sales for the first nine weeks of the second quarter of 2021 increased 12 percent compared to sales of $2.101 billion for the same period of 2019.
L Brands reported net sales of $2.351 billion for the nine weeks ended July 3, 2021, compared to net sales of $1.369 billion for the nine weeks ended July 4, 2020.
As usual, the company’s Bath & Body Works brand led revenue growth, seeing sales of $1.24 billion, up 48% percent from 2019. Victoria’s Secret net sales were $1.112 billion for the nine-week period, compared to net sales of $625.7 million. Victoria’s Secret comparable sales for the first nine weeks of the second quarter of 2021 increased 3 percent.
L Brands noted that second quarter-to-date sales in 2021 for both Bath & Body Works and Victoria’s Secret were negatively impacted by a later start to their semi-annual sales compared to 2019.
L Brands is working on plans to split Victoria’s Secret and Bath & Body Works into two separate, standalone companies. The process is expected to be complete by August.
The company also announced that The Bath & Body Works capital structure will include an authorization of a new $1.5 billion share repurchase program, among other actions.
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