L Brands shares soar on stronger-than-expected first quarter
Victoria’s Secret parent company L Brands Inc. beat Wall Street’s revenue and earnings expectations for the first quarter 2019, sending shares to rise nearly 11 percent in aftermarket trading on Wednesday.
The company, which also owns Bath & Body Works, reported net sales of $2.629 billion for the first quarter ended May 4, compared to sales of $2.626 billion reported in the same quarter last year. Analysts expected revenue of $2.56 billion.
Comparable sales for the quarter were flat compared to the quarter ended May 5, 2018 with comparable sales dropping 5 percent at the Victoria’s Secret segment and increasing 13 percent at Bath & Body Works.
For the first quarter, income fell to $40.3 million, or 14 cents a share, from $47.5 million, or 17 cents a share. Earnings per share exceeded the company’s guidance of about breakeven, driven by record results at Bath & Body Works, L Brands added.
L Brands said it closed 35 and opened one company-owned Victoria’s Secret stores in the first quarter.
Victoria’s Secret sales have been falling at an alarming rate for the last couple of years, with the brand loosing market share to competitors like Aerie.
Most recently, the brand relaunched its swimwear line for 2019, now available exclusively on the brand's e-commerce platform.
Despite being one of Victoria's Secret's most popular categories, the company discontinued its swim line in 2016 to focus on its core lingerie business, which ended up costing the company $500 million in annual sales.
The company will also be pulling the plug on its televised annual Victoria’s Secret fashion show it announced earlier this month. The TV special continues to criticized for being sexist and out of touch.
The company updated its guidance for 2019. Its full-year earnings per share are expected to sit between $2.30 to $2.60, from $2.20 to $2.60 previously forecast. Second quarter earnings per share are expected to fall between $0.15 and $0.20, it said.
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