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Victoria’s Secret parent L Brands posts larger-than-expected profit as retailer sells more full-price items

Shoppers pass in front of a Victoria’s Secret store at a mall in San Diego, California, April 22, 2021.

Bing Guan | Bloomberg | Getty Images

Victoria’s Secret parent L Brands on Wednesday reported first-quarter earnings and sales that topped analysts’ estimates, driven by momentum across its business and more people paying full price for its products.

Its stock was recently down more than 1% in extended trading.

Here’s how the company did for the quarter ended May 1, compared with what analysts were anticipating, based on a Refinitiv survey:

  • Earnings per share: $1.25 adjusted vs. $1.21 expected
  • Revenue: $3.02 billion vs. $3.01 billion expected

Net income rose to $276.6 million, or 97 cents per share, compared with a loss of $296.9 million, or $1.07 per share, a year earlier. Excluding one-time charges, L Brands earned $1.25 per share, beating the $1.21 that analysts were forecasting.

Total sales surged more than 80% to $3.02 billion from $1.65 billion a year earlier. That topped estimates for $3.01 billion.

Total same-store sales were up 21% year over year, compared with a 4% increase in the year-ago period.

Same-store sales at Victoria’s Secret rose 25%, compared with a 15% drop a year earlier. Same-store sales at Bath & Body Works climbed 16%, compared with a 41% jump a year earlier, when many consumers were stocking up on hand sanitizers at the onset of the Covid pandemic.

L Brands said sales rose throughout the quarter thanks to stimulus checks and relaxed pandemic-related restrictions in stores. While it is difficult to quantify the exact benefit from government stimulus, the company estimated that the payouts boosted sales by about $125 million — a $50 million benefit at Bath & Body Works and $75 million at Victoria’s Secret.

The company had previously announced its expectations for the first quarter and raised them multiple times, citing ongoing, heightened momentum for its Victoria’s Secret lingerie brand.

Management said in prepared remarks released Wednesday that customers have been “responding positively” to new merchandise at Victoria’s Secret, including marketing from its first-ever Mother’s Day campaign with a pregnant model.

“We are beginning to tell the story of our brand repositioning through our marketing,” the company said.

Victoria’s Secret had long held a dominant market share in the lingerie industry, but had fallen out of favor due to its overtly sexy marketing that shunned certain body types. That marketing message wasn’t working for many women, and they had started shopping at other brands, such as American Eagle‘s Aerie, that embraced inclusivity and comfort. Victoria’s Secret has had to pivot to meet their needs.

By this fall, L Brands will be spinning off its Victoria’s Secret business into its own publicly traded entity and said it wouldn’t provide a forecast for the rest of the year.

The company also named the incoming chief financial officers of the two new businesses. Wendy Arlin, currently senior vice president of finance and controller for L Brands, will become Bath & Body Works CFO. Former Big Lots CFO Tim Johnson will become 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. Analysts had been looking for 76 cents per share, according to Refinitiv.

It projects second-quarter sales will rise between 10% and 15% from 2019 levels.

L Brands has said the split will allow both of its brands to better focus on growth and have greater financial flexibility to adapt to a changing retail landscape. It had been contemplating either a spinoff or a sale but said the spinoff ended up being the best option for the business to fetch the highest value.

As of Wednesday’s market close, L Brands shares are up about 82% year to date. The company has a market cap of $18.8 billion.

Find the full press release from L Brands here.

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