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L Brands Posts Decent Comps in October, Updates Earnings View

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Shares of L Brands, Inc. (LB - Free Report) increased roughly 6% on Nov 8, primarily due to decent comparable sales (comps) performance and an upbeat view for third-quarter fiscal 2018. After rising 5% in September, comps increased 4% in October. Moreover, net sales rose 8% to $860.5 million during October.

Moving on, Victoria’s Secret witnessed flat comps during the month under review, owing to weakness in the Pink and Lingerie brand. Moreover, Victoria’s Secret merchandise margin rate fell significantly due to higher promotional activities to boost traffic. 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.

Meanwhile, comps improved 11% in case of Bath & Body Works, driven by strong demand. Merchandise margin rate for the same also increased on the back of less promotional activities and positive shrink result.

Apart from October comps, this Zacks Rank #3 (Hold) company updated its bottom line projection for the third quarter. It now expects adjusted earnings to be roughly 15 cents a share. This reflects a significant rise from the prior view of breakeven to 5 cents earnings per share on the back of strong performance at Bath & Body Works. However, including certain charges, the company expects to report loss of 17 cents a share. The current Zacks Consensus Estimate for the quarter under review is pegged at 6 cents.

For the 13-week period ended Nov 3, 2018, comps rose 4% year over year, while net sales increased 6% to $2775 million. Comps declined 2% at Victoria’s Secret, while the metric improved 13% at Bath & Body Works.

Notably, this specialty retailer of women's intimate and other apparel, beauty, and personal care products gained 15.6% in the past month, outperforming the industry’s rise of 3.7%.



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