Not much reaction was seen in L Brands, Inc.’s (LB - Analyst Report) shares, after it posted sales data for December (five weeks ended Jan 4, 2014). The stock rose marginally by 0.2% in the last trading session. It might be that investors factored in better comps results for the December month than November but were at the same time cautious as December sales data were below analysts’ expectations.
L Brands reported 2% year over year rise in comps.
This specialty retailer of women’s intimate and other apparel, beauty and personal care products depicted a 7.8% rise in net sales of $2.098 billion from $1.947 billion in the prior-year period. For the 48 week period ended Jan 4, 2014, net sales increased 6% year over year to $10.042 billion while comps grew 2% for the said period.
Increased promotional activity had a profound impact on merchandise margins and compelled L Brands to lower its fourth-quarter fiscal 2013 guidance. The company now expects earnings per share to be around $1.60 as against the earlier projection of $1.67 to $1.82.
The Zacks Consensus Estimate for the fourth quarter stands at $1.60 per share.
L Brands comparable-store sales for December rose 3% at Victoria’s Secret Stores & Victoria’s Secret Beauty and 1% at Bath & Body Works & The White Barn Candle Co. but fell 7% at La Senza. Sales rose 1% at Victoria’s Secret Direct.
The holiday season has been quite tough and the intense competition in prices made it more difficult for retail companies. Apart from L Brands, heavy promotional expenditure weighed on the performance of other companies as well. At present, most companies are grappling with reduced margins, which are compelling a lowered guidance for the quarter.
Retailers battered by the holiday sales results include Family Dollar Stores Inc. and American Eagle Outfitters Inc. (AEO - Analyst Report) . While Family Dollar posted a 3% fall in comps for December, American Eagle witnessed 7% comps decline.
Another retailer, Sears Holdings Corporation’s , announced one of its most disappointing holiday season sales results. Total domestic comparable-store sales for the nine-week period ended on Jan 6, 2014, declined 7.4%.
L Brands, which operates 2,934 stores, has a Zacks Rank #3 (Hold).