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L Brands Comps Up 2% in August, Flat Likely in September
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L Brands, Inc.’s comparable store sales (comps) for the four weeks ended Aug 27, 2016 increased 2% year over year and also handily beat analysts' expectations. Moreover, net sales for August rose 3% to $852.9 million.
L Brands’ comps were flat at Victoria’s Secret and increased 7% at Bath & Body Works. On the other hand, for the 30-week period ended Aug 27, 2016, net sales grew 4% to $6.356 billion from $6.103 billion in the prior-year period. Comps rose 3% over the same period.
The company said that merchandise margin rate declined significantly in August in comparison to last year primarily due to fall in the beauty category. As a result, the company is repositioning the category.
Further, the company expects comparable sales for the month of September to be nearly flat.
This Zacks Rank #2 (Buy) company’s sustained focus on cost containment, inventory management, merchandise, and speed-to-market initiatives has kept it afloat in a sluggish consumer environment. We believe that the company’s operational efficiencies, together with its new and innovative collections, will drive sales higher. Further, the company’s foray into international markets is likely to provide long-term growth opportunities and generate increased sales volumes.
Recently, the company updated its fiscal 2016 earnings guidance. Management now projects earnings in the band of $3.70–$3.85 per share for fiscal 2016, up from the previous guidance of $3.60–$3.80 per share. On the other hand, the company anticipates the fiscal third-quarter earnings in the range of 40–45 cents. L Brands now expects comparable sales in the third-quarter to be approximately flat year over year. For fiscal 2016, the company expects comparable sales to remain flat year over year or increase slightly, and anticipates total sales to increase about 2 points higher than comps on account of square footage growth. Both for third quarter and fiscal 2016, gross margin is estimated to deteriorate year over year.
Other retailers that recently reported comps for August include The Gap, Inc. (GPS - Free Report) and The Buckle, Inc. (BKE - Free Report) . Comps of these companies fell 3% and 14.8%, respectively. On the other hand, Costco Wholesale Corporation (COST - Free Report) registered flat comps.
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L Brands Comps Up 2% in August, Flat Likely in September
L Brands, Inc.’s comparable store sales (comps) for the four weeks ended Aug 27, 2016 increased 2% year over year and also handily beat analysts' expectations. Moreover, net sales for August rose 3% to $852.9 million.
L Brands’ comps were flat at Victoria’s Secret and increased 7% at Bath & Body Works. On the other hand, for the 30-week period ended Aug 27, 2016, net sales grew 4% to $6.356 billion from $6.103 billion in the prior-year period. Comps rose 3% over the same period.
The company said that merchandise margin rate declined significantly in August in comparison to last year primarily due to fall in the beauty category. As a result, the company is repositioning the category.
Further, the company expects comparable sales for the month of September to be nearly flat.
L BRANDS INC Price
L BRANDS INC Price | L BRANDS INC Quote
This Zacks Rank #2 (Buy) company’s sustained focus on cost containment, inventory management, merchandise, and speed-to-market initiatives has kept it afloat in a sluggish consumer environment. We believe that the company’s operational efficiencies, together with its new and innovative collections, will drive sales higher. Further, the company’s foray into international markets is likely to provide long-term growth opportunities and generate increased sales volumes.
Recently, the company updated its fiscal 2016 earnings guidance. Management now projects earnings in the band of $3.70–$3.85 per share for fiscal 2016, up from the previous guidance of $3.60–$3.80 per share. On the other hand, the company anticipates the fiscal third-quarter earnings in the range of 40–45 cents. L Brands now expects comparable sales in the third-quarter to be approximately flat year over year. For fiscal 2016, the company expects comparable sales to remain flat year over year or increase slightly, and anticipates total sales to increase about 2 points higher than comps on account of square footage growth. Both for third quarter and fiscal 2016, gross margin is estimated to deteriorate year over year.
Other retailers that recently reported comps for August include The Gap, Inc. (GPS - Free Report) and The Buckle, Inc. (BKE - Free Report) . Comps of these companies fell 3% and 14.8%, respectively. On the other hand, Costco Wholesale Corporation (COST - Free Report) registered flat comps.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>