Shoppers walk past a Victoria’s Secret store at a mall in San Diego, Calif., On April 22, 2021.
Bing Guan | Bloomberg | Getty Images
Victoria’s secret parent L brands On Wednesday, first quarter earnings and sales were reported that exceeded analyst estimates, driven by momentum across the business and the fact that more people are paying full price for their products.
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 earlier in the year Covid pandemic.
L Brands said sales rose during the quarter thanks to stimulus checks and looser restrictions related to pandemics 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 his expectations for the first quarter and increased it several times, citing continued increased momentum for the 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’re starting to tell the story of our brand repositioning 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. This marketing message didn’t work for many women and they had started shopping at other brands, such as: american eagle‘s Aerie, which included inclusivity and comfort. Victoria’s Secret had to spin to meet their needs.
Until this fall L Brands will outsource its Victoria’s Secret business into his own publicly traded company and said it wouldn’t provide 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 Large quantities CFO Tim Johnson becomes Victoria’s secret CFO.
For the second quarter, L Brands is asking for adjusted earnings per share in a range of 80 cents to $ 1. According to Refinitiv, analysts were looking for 76 cents per share.
Revenue is forecast to increase between 10% and 15% in Q2 compared to 2019.
According to L Brands, the split will allow both brands to better focus 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.