L Manufacturers (LB) Q1 2021 consequence hit
Shoppers walk past a Victoria’s Secret store in a mall in San Diego, Calif., On April 22, 2021.
Bing Guan | Bloomberg | Getty Images
Victoria’s secret parent company L Brands reported first-quarter earnings and sales that beat analysts’ estimates on Wednesday.
The stock recently fell more than 1% in extended trading.
Here’s how the company performed for the quarter ended May 1, compared to analyst expectations based on a refinitive survey:
- Earnings per share: $ 1.25 adjusted versus $ 1.21 expected
- Revenue: $ 3.02 billion versus $ 3.01 billion expected
Net income rose to $ 276.6 million, or 97 cents per share, compared to a loss of $ 296.9 million, or $ 1.07 per share, last year. With no one-time expense, L Brands earned $ 1.25 per share, beating analysts’ forecast $ 1.21.
Total revenue increased more than 80% from $ 1.65 billion a year ago to $ 3.02 billion. That surpassed the estimates for $ 3.01 billion.
Total revenue in the same store increased 21% year over year, compared to a 4% increase in the same period last year.
At Victoria’s Secret, sales in the same store rose 25%, compared to a 15% decrease last year. Sales in the same store at Bath & Body Works rose 16%, compared to a 41% increase last year when many consumers stocked up on hand sanitizer at the start of the Covid pandemic.
According to L Brands, sales increased during the quarter thanks to stimulus checks and relaxed pandemic restrictions in stores. While it’s difficult to quantify the exact benefits of government incentives, the company estimated that the payouts increased sales by about $ 125 million – a benefit of $ 50 million at Bath & Body Works and $ 75 million at Victoria’s Secret.
The company had previously announced its first quarter expectations and raised them several times, citing the continued increased momentum of its lingerie brand Victoria’s Secret.
Management said in prepared notes released Wednesday that customers at Victoria’s Secret have responded “positively” to new merchandise, including marketing of its first-ever Mother’s Day campaign with a pregnant model.
“We are starting to tell the story of our repositioning of our brand through our marketing,” said the company.
Victoria’s Secret has long had a dominant market share in the lingerie industry but fell out of favor due to its overtly sexy marketing that avoided certain body types. That marketing message wasn’t working for many women and they had started shopping at other brands like American Eagle’s Aerie that included inclusivity and convenience. Victoria’s Secret had to spin to meet their needs.
By the fall, L Brands will spin off its Victoria’s Secret business into its own publicly traded company and said it would not make a forecast for the rest of the year.
The company also appointed the new CFOs for the two new companies. Wendy Arlin, currently Senior Vice President Finance and Controller at L Brands, will become CFO of Bath & Body Works. Former Big Lots CFO Tim Johnson becomes Victoria’s secret CFO.
For the second quarter, L Brands is calling for adjusted earnings per share in a range of 80 cents to $ 1. According to Refinitiv, analysts were looking for 76 cents per share.
It is forecast that Q2 sales will increase between 10% and 15% compared to 2019.
According to L Brands, the split will allow both brands to focus more on growth and have greater financial flexibility to adapt to a changing retail landscape. It had either considered a spin-off or a sale, but said the spin-off was the best option for the company to achieve the highest value.
At the close of trading on Wednesday, L Brands shares were up around 82% since the start of the year. The company has a market capitalization of $ 18.8 billion.
The full press release from L Brands can be found here.