Retailer L Brands (LB 49.71, +0.60, +1.2%) provided a January sales review this morning and updated its earnings guidance for its fiscal fourth quarter. The company's stock has reacted well initially to the news, which is understandable given its encouraging nature.
Briefly, net sales for the five-week period ended February 3, 2018, increased 29.2% compared to the four-week period ended January 28, 2017. The fifth week added approximately $150 million in sales and $0.07 in earnings per share. Excluding that extra week, net sales were up approximately 10.5% year-over-year.
There was no adjustment needed, however, for comparable sales, which increased 7% versus the five weeks ended February 4, 2017, bolstered by a 4% comparable sales increase at Victoria's Secret and a 13% increase in comparable sales at Bath & Body Works.
Clearly, then, L Brands, which also counts PINK, La Senza and Henri Bendel in its stable of brands, saw some strong demand in January, which tends to be accented with post-holiday promotional activity by retailers and increased gift-card spending.
Comparable sales for the 14-week fourth quarter ended February 3, 2018, increased 2%, which was a good way to close out a fiscal year that proved challenging given the exit of the swim and apparel categories at Victoria's Secret.
To wit, L Brands's comparable sales decreased 3% compared to the 53-week period ended February 4, 2017, with Victoria's Secret having a negative impact of about three percentage points.
On a recorded call discussing the January sales, L Brands said it will keep providing monthly sales updates; however, the retailer will no longer provide forward comparable sales guidance.
In conjunction with today's news, L Brands raised its fourth quarter earnings per share guidance to $2.05 from prior guidance of about $2.00, citing a lower projected tax rate of about 34% compared to prior guidance of 36.5%. That lower rate does not include any impact from tax reform legislation.
Additionally, L Brands announced the declaration of its regular quarterly dividend of $0.60 per share, marking its 173rd consecutive quarterly dividend. At its current price, L Brands sports a very attractive dividend yield of 4.83% and trades at approximately 14.2x next year's estimated earnings.