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L Brands (LB) Loses 12% on Dull Show by Victoria's Secret
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There seems to be no respite for L Brands, Inc. , which slipped 12.1% following the release of its June 2018 sales results. This is because comparable sales (comps) fell 1% at Victoria’s Secret despite an extended sale and slashed prices.
Management admitted that the semi-annual sale had seen a soft start which had impelled it to extend it by two more weeks compared to last year to clear inventory. This led to a substantial decline in merchandise rate compared to the year-ago period.
Although net sales increased 6% to $1.282 billion in June, it compared unfavorably with May’s net sales growth of 10%. Further, after reporting comps growth of 5% in May, this Zacks Rank #4 (Sell) company registered 3% comps growth for the five weeks ended Jul 7. This 3% growth was backed by 10% comps year-over-year increase in Bath & Body Works for two straight months. However, the merchandise margin rate declined.
The company had earlier provided bleak second-quarter outlook and trimmed view for fiscal 2018 in the wake of stiff competition from brick-&-mortar and e-retailers. We note that the stock has declined 10.6% in the past three months against the industry’s rise of 7.1%.
L Brands anticipates second-quarter and fiscal 2018 comps growth in low-single digits. Further, gross margin, an important metric which shows a company’s financial health, has been constantly decelerating in the past few quarters. In the first quarter, gross margin contracted 120 basis points to 35.9% year over year and is expected to decline again in the second quarter.
Earnings per share in the second quarter are expected in the range of 30-35 cents versus 48 cents in the year-ago quarter. Management lowered fiscal 2018 earnings per share guidance to a range of $2.70-$3.00 from $2.95-$3.25. In the year-ago period, the company reported earnings per share of $3.20.
3 Retail Stocks Hogging the Limelight
Urban Outfitters (URBN - Free Report) delivered an average positive earnings surprise of 19.8% in the trailing four quarters. The stock has a long-term earnings growth rate of 12% and flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shoe Carnival (SCVL - Free Report) delivered an average positive earnings surprise of 21.3% in the last four quarters. This Zacks Rank #1 company has a long-term earnings growth rate of 12%.
Fossil Group (FOSL - Free Report) came up with an average positive earnings surprise of 54.1% over the preceding four quarters. The Zacks Rank #2 (Buy) company has a long-term earnings growth rate of 5%.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
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L Brands (LB) Loses 12% on Dull Show by Victoria's Secret
There seems to be no respite for L Brands, Inc. , which slipped 12.1% following the release of its June 2018 sales results. This is because comparable sales (comps) fell 1% at Victoria’s Secret despite an extended sale and slashed prices.
Management admitted that the semi-annual sale had seen a soft start which had impelled it to extend it by two more weeks compared to last year to clear inventory. This led to a substantial decline in merchandise rate compared to the year-ago period.
Although net sales increased 6% to $1.282 billion in June, it compared unfavorably with May’s net sales growth of 10%. Further, after reporting comps growth of 5% in May, this Zacks Rank #4 (Sell) company registered 3% comps growth for the five weeks ended Jul 7. This 3% growth was backed by 10% comps year-over-year increase in Bath & Body Works for two straight months. However, the merchandise margin rate declined.
The company had earlier provided bleak second-quarter outlook and trimmed view for fiscal 2018 in the wake of stiff competition from brick-&-mortar and e-retailers. We note that the stock has declined 10.6% in the past three months against the industry’s rise of 7.1%.
L Brands anticipates second-quarter and fiscal 2018 comps growth in low-single digits. Further, gross margin, an important metric which shows a company’s financial health, has been constantly decelerating in the past few quarters. In the first quarter, gross margin contracted 120 basis points to 35.9% year over year and is expected to decline again in the second quarter.
Earnings per share in the second quarter are expected in the range of 30-35 cents versus 48 cents in the year-ago quarter. Management lowered fiscal 2018 earnings per share guidance to a range of $2.70-$3.00 from $2.95-$3.25. In the year-ago period, the company reported earnings per share of $3.20.
3 Retail Stocks Hogging the Limelight
Urban Outfitters (URBN - Free Report) delivered an average positive earnings surprise of 19.8% in the trailing four quarters. The stock has a long-term earnings growth rate of 12% and flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shoe Carnival (SCVL - Free Report) delivered an average positive earnings surprise of 21.3% in the last four quarters. This Zacks Rank #1 company has a long-term earnings growth rate of 12%.
Fossil Group (FOSL - Free Report) came up with an average positive earnings surprise of 54.1% over the preceding four quarters. The Zacks Rank #2 (Buy) company has a long-term earnings growth rate of 5%.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>