L Brands, Inc. continues to grapple with soft performance of Victoria’s Secret brand. After falling 4% in the month of July, Victoria’s Secret comparable sales (comps) declined 5% in the month of August. Management held weakness in the Pink brand behind the dismal comps run. The metric remained roughly flat for Lingerie. Moreover, merchandise margin rate fell significantly in the month under review, primarily owing to higher promotional activity.
However, comps at Bath & Body Works surged 15% in the month of August, following an increase of 10% in the preceding month. Merchandise margin rate increased owing to less promotional activity, partly offset by channel shift and transportation costs.
Consequently, L Brands reported 1% jump in comps for the four-week period ended Sep 1, 2018. Comps for the month under review fared better than the prior-year period, when the metric declined 4% and also showcased an improvement from the month of July, when comps remained flat. Moreover, net sales rose 1.7% to $856.3 million during the month under review.
L Brands has been reeling under consumers’ changing preferences that continue to impact its Victoria’s Secret lingerie brand. Further, weakness in the Pink brand has added to its woes. The reflection of the same was quite visible in the company’s recent second-quarter fiscal 2018 results.
We note that comparable store sales for the Pink brand declined in the mid-single digit range during the second quarter due to weakness in both lingerie and loungewear. The total PINK merchandise margin rate also declined considerably. Further, management highlighted that Victoria’s Secret’s results came below expectations, with comparable sales falling 1% and lower merchandise margin rate. Apart from these, the company has been grappling with shrinking gross margin from quite some time now.
These compelled management to trim fiscal 2018 view for the second time. (Read: L Brands Trims View Despite Q2 Earnings Beat, Stock Down)
Consequently, shares of this Zacks Rank #4 (Sell) stock plunged 33% against the industry’s growth of 10% in the past six months.
Forget L Brands, Buy These 3 Stocks
Boot Barn Holdings (BOOT - Free Report) has an average positive earnings surprise of 31.8% for the trailing four quarters. It sports 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 26.1% in the trailing four quarters. The stock carries a Zacks Rank #2 (Buy).
Urban Outfitters (URBN - Free Report) delivered an average positive earnings surprise of 17.7% in the trailing four quarters. It has a long-term earnings growth rate of 12% and a Zacks Rank #2.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
L Brands, Inc. continues to grapple with soft performance of Victoria’s Secret brand. After falling 4% in the month of July, Victoria’s Secret comparable sales (comps) declined 5% in the month of August. Management held weakness in the Pink brand behind the dismal comps run. The metric remained roughly flat for Lingerie. Moreover, merchandise margin rate fell significantly in the month under review, primarily owing to higher promotional activity.
However, comps at Bath & Body Works surged 15% in the month of August, following an increase of 10% in the preceding month. Merchandise margin rate increased owing to less promotional activity, partly offset by channel shift and transportation costs.
Consequently, L Brands reported 1% jump in comps for the four-week period ended Sep 1, 2018. Comps for the month under review fared better than the prior-year period, when the metric declined 4% and also showcased an improvement from the month of July, when comps remained flat. Moreover, net sales rose 1.7% to $856.3 million during the month under review.
L Brands has been reeling under consumers’ changing preferences that continue to impact its Victoria’s Secret lingerie brand. Further, weakness in the Pink brand has added to its woes. The reflection of the same was quite visible in the company’s recent second-quarter fiscal 2018 results.
We note that comparable store sales for the Pink brand declined in the mid-single digit range during the second quarter due to weakness in both lingerie and loungewear. The total PINK merchandise margin rate also declined considerably. Further, management highlighted that Victoria’s Secret’s results came below expectations, with comparable sales falling 1% and lower merchandise margin rate. Apart from these, the company has been grappling with shrinking gross margin from quite some time now.
These compelled management to trim fiscal 2018 view for the second time. (Read: L Brands Trims View Despite Q2 Earnings Beat, Stock Down)
Consequently, shares of this Zacks Rank #4 (Sell) stock plunged 33% against the industry’s growth of 10% in the past six months.
Forget L Brands, Buy These 3 Stocks
Boot Barn Holdings (BOOT - Free Report) has an average positive earnings surprise of 31.8% for the trailing four quarters. It sports 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 26.1% in the trailing four quarters. The stock carries a Zacks Rank #2 (Buy).
Urban Outfitters (URBN - Free Report) delivered an average positive earnings surprise of 17.7% in the trailing four quarters. It has a long-term earnings growth rate of 12% and a Zacks Rank #2.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on URBN - FREE
Get the latest research report on BOOT - FREE
Get the latest research report on SCVL - FREE