L Brands (LB 28.54, -3.35, -10.50%) opened lower by more than 6%
after the company reported better than expected quarterly results but issued
cautious guidance. However, a portion of the early decline is due to the stock
going ex-dividend today.
The apparel retailer, which owns brands like Victoria's Secret and Bath & Body Works, reported above-consensus second quarter earnings of $0.36/share on an 8.3% year/year increase in revenue to $2.98 bln, which was also ahead of estimates.
The company's above-consensus results are being overshadowed by cautious guidance for the remainder of the fiscal year. L Brands expects that third quarter earnings will be between breakeven and $0.05 while earnings guidance for the fiscal year was lowered to $2.45 -$2.70 per share from $2.70 - $3.00 per share.
Returning to second quarter results, comparable sales increased 3% year/year after decreasing 8% one year ago. Comparable sales at Bath & Body Works increased 10% after growing 6% one year ago while Victoria's Secret comparable sales declined 1% after falling 14% one year ago.
Excluding direct sales, systemwide comparable sales declined 1% after falling 6% one year ago. Comparable sales at Bath & Body Works grew 7% after increasing 4% one year ago. Comparable sales at Victoria's Secret fell 5% after declining 11% one year ago.
Looking at total sales, Victoria's Secret revenue at company-owned stores in the U.S. and Canada grew 1.0% year-over-year to $1.36 bln while direct sales grew 21.9% to $360.0 mln. Bath & Body Works sales grew 9.5% to $824.3 mln while direct sales increased 29.8% to $139.3 mln. Victoria's Secret and Bath & Body Works international sales increased 27.7% to $145.4 mln. Other sales grew 11.5% to $150.0 mln.
In addition to reporting earnings, the company announced that CEO of Victoria's Secret PINK, Denise Landman, will retire at the end of this year. Ms. Landman will be replaced by Amy Hauk, who is the current President of Merchandising and Product Development at Bath & Body Works.
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