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L Brands (LB) to Post Q1 Earnings: What Awaits the Stock?

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L Brands, Inc. (LB - Free Report) is likely to register a decline in the top line when it reports first-quarter fiscal 2020 numbers on May 20, after the market closes. The Zacks Consensus Estimate for revenues is pegged at $1,908 million, indicating a decline of 27.4% from the prior-year reported figure.

Further we note that this specialty retailer of women’s intimate and other apparel, beauty, and personal care products is likely to report a loss for the quarter under review. The Zacks Consensus Estimate for the bottom line is pegged at a loss of 37 cents that widened by 9 cents in the past 30 days. The company had reported earnings of 14 cents in the year-ago quarter.

Notably, the company’s bottom line has outperformed the Zacks Consensus Estimate in the last reported quarter by 1.1%.

Key Factors to Note

L Brands’ Victoria’s Secret brand has been witnessing soft sales for quite some time now on account of stiff competition and consumers’ changing preferences. Analysts have pointed out that incorrect merchandising actions and the company’s inability to keep up with its strong brand image have led to Victoria’s Secret’s failure. This has been weighing upon the company’s top-line performance. Further, L Brands has been grappling with strained margins for quite some time now.

Moreover, the outbreak of coronavirus compelled the company to temporarily close all Bath & Body Works, Victoria’s Secret and PINK stores in the United States and Canada. Incidentally, management called-off its first-quarter guidance on Feb 26, owing to difficulty in ascertaining the impact of the deadly virus on the performance.

Nevertheless, L Brands remains focused on cost containment, inventory management and curbing capital expenditures. Notably, Bath & Body Works has been the company’s bright spot.

L Brands, Inc. Price, Consensus and EPS Surprise

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 doesn’t conclusively predict 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 odds of an earnings beat. But that’s not the case here.

Although L Brands carries a Zacks Rank #3, it has an Earnings ESP of -72.27%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Dollar General (DG - Free Report) has an Earnings ESP of +1.25% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kroger (KR - Free Report) has an Earnings ESP of +4.52% and a Zacks Rank #2.

Lowe's (LOW - Free Report) has an Earnings ESP of +3.33% and a Zacks Rank #3.

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