Back to top

Image: Bigstock

L Brands Reports Flat Comps in July, Updates Earnings View

Read MoreHide Full Article

L Brands, Inc. reported flat comparable sales (comps) for the four weeks ended Aug 4, 2018. Comps for the month under review fared far better than the prior-year period, when the metric declined 7%. Moreover, net sales rose 10.7% to $849.7 million during the month under review.

While, comps fell 4% at Victoria’s Secret, the same at Bath & Body Works improved 10%. Moreover, Victoria’s Secret merchandise margin rate fell significantly in July, primarily due to higher promotional activities to boost traffic. In case of Bath & Body Works, merchandise margin rate increased owing to less promotional activities and calendar shift of semi-annual sales days to June.

Apart from July comps, this Zacks Rank #3 (Hold) company reported net sales for second-quarter fiscal 2018 (ending Aug 4, 2018) that jumped 8.3% year over year to $2,983.8 million. During the quarter, sales at Victoria’s Secret and Bath and Body Works rose 4.8% and 12% to $1,724.8 million and $963.6 million, respectively. On the other hand, sales at VS & BBW International increased 27.7% to $145.4 million in the said quarter. Comps for the quarter improved 3% reflecting an increase of 10% at Bath & Body Works, which was offset by a decrease of 1% at Victoria’s Secret.

The company now expects second-quarter earnings to come in at the higher end of its previously provided guided range of 30-35 cents a share, which is down from 48 cents reported in the prior-year period. The Zacks Consensus Estimate for the quarter is pegged at 31 cents.

Earlier, management had lowered fiscal 2018 earnings per share view 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. These downsides led the stock to decline 2.5% in the past three months, underperforming the industry’s growth of 10.3%.



Additionally, L Brands anticipates second-quarter and fiscal 2018 comps growth in low-single digits each. Further, gross margin, an important metric that 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.

Check These Hot Picks

Kering (PPRUY - Free Report) has a long-term earnings growth rate of 12% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boot Barn Holdings (BOOT - Free Report) has a long-term earnings growth rate of 20.7 % and a Zacks Rank #1.

American Eagle Outfitters (AEO - Free Report) has a long-term earnings growth rate of 7.9% and a Zacks Rank #2 (Buy).

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 >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


American Eagle Outfitters, Inc. (AEO) - free report >>

Boot Barn Holdings, Inc. (BOOT) - free report >>

Kering SA (PPRUY) - free report >>

Published in