L Brands Bucks Retail Trend, Posts 5% Sales Growth
18 August 2016 - 8:20AM
Dow Jones News
L Brands Inc. lifted its view for the year as revenue topped
expectations, a bright spot in a retail industry grappling with
falling foot traffic and growing competition.
The Ohio-based owner of Victoria's Secret and Bath & Body
Works, in addition to its namesake banner, said total sales rose 5%
in its June quarter. A 3% rise in existing-store sales was behind
the increase, thanks to an improvement in Victoria Secret sales and
continued strength in the bath and body business.
Shares climbed 3.3% in after-hours trading. Through Wednesday's
close, the stock has fallen 23% this year.
The same-store sales gain, which matched analysts' expectations
and the previous quarter's clip, was down from a 4% rate a year
earlier. Still, it comes as many retailers report sliding sales
that are largely the result of lower traffic as more shoppers move
online, especially to Amazon.com, and as fast-fashion chains like
Hennes & Mauritz AB gab market share. Retail giant Macy's last
week said it would shut another 100 stores, shrinking its physical
footprint by 15% as same-store sales fell 2%. Earlier Wednesday,
Target Corp. said sales at existing stores fell for the first time
in more than two years and warned of further weakness.
The improvement in L Brands' core lingerie business comes after
the company in May cautioned that demand there was soft. L Brands'
longtime chief executive, Leslie Wexner, took over the segment in
February and has been trying to scale back promotions and narrow
merchandise offerings. The June report is a sign Mr. Wexner's
efforts are taking hold. Comparable sales at Victoria's Secret rose
2%, up from a 1% rise in the first quarter.
In all, L Brands reported a profit of $252.4 million, or 87
cents a share, up from $202.5 million, or 68 cents a share, a year
earlier. The latest quarter's result includes a gain of 24 cents a
share that stems from a cash distribution.
Revenue increased to $2.89 billion from $2.77 billion. Analysts
predicted an adjusted 59 cents on $2.86 billion, according to
Thomson Reuters.
Following the better-than-expected results, L Brands pushed up
its guidance for the year. The company now sees $3.70 to $3.85 in
adjusted earnings per share, up from an earlier range to $3.60 to
$3.80 and versus the $3.73 analysts have anticipated.
For the current quarter, thought, L Brands gave an outlook that
fell short of expectations. The company predicted 40 cents to 45
cents in adjusted per-share profit, shy of the 47 cents analysts
have expected.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
August 17, 2016 18:05 ET (22:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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