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Bath & Body Works Division to Aid L Brands' (LB) Q4 Earnings
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L Brands, Inc. (LB - Free Report) is likely to register an increase in the top line when it reports fourth-quarter fiscal 2020 results on Feb 24, 2021, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $4,954 million, indicating growth of 5.3% from the prior-year reported figure.
The Zacks Consensus Estimate for fourth-quarter earnings has increased by a couple of cents to $2.81 over the past seven days. The consensus estimate suggests a sharp improvement from earnings of $1.88 reported in the year-ago quarter.
Notably, this specialty retailer of women’s intimate and other apparel, beauty, and personal care products has a trailing four-quarter earnings surprise of 479.6%, on average. In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by a wide margin.
Key Factors to Note
L Brands’ fourth-quarter performance is likely to have benefited from sturdy performance at Bath & Body Works and strength in the direct channel at Victoria’s Secret segment. Certainly, the company remains committed toward improving performance by staying customer-focused, enriching assortments, and enhancing store and online experiences. The company has been managing inventory, optimizing capital expenditures and reducing overhead expenses. Markedly, the company in co-operation with suppliers has been identifying opportunities to lower merchandise costs.
We note that L Brands posted strong holiday sales results that exceeded management’s initial expectations. Reduced promotional activity, better merchandise assortment and growth in the direct channel have been helping the company navigate through the pandemic-hit environment. Management informed that comparable sales for the nine-week period ended Jan 2, 2021, increased 5%.
At the Bath & Body Works segment, comparable sales grew 17%, including a comparable sales gain of 5% at stores, for the nine-week period ended Jan 2, 2021. Notably, sales in the direct channel surged 64%. However, Victoria’s Secret, comparable sales dropped 9% during the holiday period. This reflects comparable sales decline of 23% at stores. However, sales in the direct channel advanced 24%. Moreover, the merchandise margin rate rose significantly for the quarter-to-date period.
Markedly, L Brands raised its earnings view for the final quarter. Management guided fourth-quarter earnings in the range of $2.95-$3.00 per share, up from its earlier view of $2.70-$2.80. The company projected comparable sales increase of 10%, comprising a 22% jump at Bath & Body Works segment but a 3% decline at Victoria’s Secret brand.
Our proven model conclusively predicts an earnings beat for L Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
L Brands has a Zacks Rank #3 and an Earnings ESP of +6.31%.
3 More Stocks With a Favorable Combination
Here are three other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
Home Depot (HD - Free Report) has an Earnings ESP of +3.28% and a Zacks Rank #3.
Costco (COST - Free Report) has an Earnings ESP of +2.43% and a Zacks Rank #3.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Bath & Body Works Division to Aid L Brands' (LB) Q4 Earnings
L Brands, Inc. (LB - Free Report) is likely to register an increase in the top line when it reports fourth-quarter fiscal 2020 results on Feb 24, 2021, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $4,954 million, indicating growth of 5.3% from the prior-year reported figure.
The Zacks Consensus Estimate for fourth-quarter earnings has increased by a couple of cents to $2.81 over the past seven days. The consensus estimate suggests a sharp improvement from earnings of $1.88 reported in the year-ago quarter.
Notably, this specialty retailer of women’s intimate and other apparel, beauty, and personal care products has a trailing four-quarter earnings surprise of 479.6%, on average. In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by a wide margin.
Key Factors to Note
L Brands’ fourth-quarter performance is likely to have benefited from sturdy performance at Bath & Body Works and strength in the direct channel at Victoria’s Secret segment. Certainly, the company remains committed toward improving performance by staying customer-focused, enriching assortments, and enhancing store and online experiences. The company has been managing inventory, optimizing capital expenditures and reducing overhead expenses. Markedly, the company in co-operation with suppliers has been identifying opportunities to lower merchandise costs.
We note that L Brands posted strong holiday sales results that exceeded management’s initial expectations. Reduced promotional activity, better merchandise assortment and growth in the direct channel have been helping the company navigate through the pandemic-hit environment. Management informed that comparable sales for the nine-week period ended Jan 2, 2021, increased 5%.
At the Bath & Body Works segment, comparable sales grew 17%, including a comparable sales gain of 5% at stores, for the nine-week period ended Jan 2, 2021. Notably, sales in the direct channel surged 64%. However, Victoria’s Secret, comparable sales dropped 9% during the holiday period. This reflects comparable sales decline of 23% at stores. However, sales in the direct channel advanced 24%. Moreover, the merchandise margin rate rose significantly for the quarter-to-date period.
Markedly, L Brands raised its earnings view for the final quarter. Management guided fourth-quarter earnings in the range of $2.95-$3.00 per share, up from its earlier view of $2.70-$2.80. The company projected comparable sales increase of 10%, comprising a 22% jump at Bath & Body Works segment but a 3% decline at Victoria’s Secret brand.
L Brands, Inc. Price, Consensus and EPS Surprise
L Brands, Inc. price-consensus-eps-surprise-chart | L Brands, Inc. Quote
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for L Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
L Brands has a Zacks Rank #3 and an Earnings ESP of +6.31%.
3 More Stocks With a Favorable Combination
Here are three other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
Target (TGT - Free Report) has an Earnings ESP of +9.79% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Home Depot (HD - Free Report) has an Earnings ESP of +3.28% and a Zacks Rank #3.
Costco (COST - Free Report) has an Earnings ESP of +2.43% and a Zacks Rank #3.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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