L Brands (LB) Posts Soft Holiday Sales, Trims Earnings View

L Brands, Inc. (NYSE:LB) disappointed with its holiday season performance. Weak sales number at Victoria's Secret brand hurt the company’s overall performance. Even strength witnessed in Bath & Body Works failed to act as a savior. Consequently, management trimmed its fourth-quarter fiscal 2019 earnings projection.

This Columbus, OH-based company posted net sales of $3.906 billion for the nine weeks ended Jan 4, 2020, reflecting year-over-year decline of 4.1%. Comparable sales fell 3% during the aforementioned time frame against an increase of 4% reported in the year-ago period.

The company has been grappling with softness at the Victoria’s Secret brand due to stiff competition and consumers’ changing preferences, and reflection of the same was visible in the holiday sales number. The segment’s comparable sales dropped 12% during the November and December period compared with a decline of 4% in the prior-year period.

Nonetheless, solid performance at Bath & Body Works brand did provide some cushion. The segment put up a stellar show with 9% jump in comparable sales. In the year-ago period, Bath & Body Works had registered comparable sales increase of 14%.

But this was not enough to stop L Brands from slashing its earnings per share view for the final quarter. The company now envisions earnings to be $1.85, down from the prior estimate of $2.00. The current Zacks Consensus Estimate for the quarter under review stands at $1.98, which could witness a downward revision in the coming days.

Wrapping Up

L Brands is struggling to make a comeback in the wake of rising competition from the likes of ThirdLove, Adore Me, Lively, and True & Co. Further, the company has often been accused of failing to bring in trendy merchandise by industry experts. Clearly, continued sluggishness in Victoria’s Secret has been taking a toll on its performance.

Nevertheless, the company is leaving no stone unturned to revive its Victoria’s Secret brand. Product launches, increased focus on omnichannel capabilities and improved marketing strategies are some of the notable moves in this direction. Also, L Brands has been gaining from Bath & Body Works.

We note that shares of this Zacks Rank #3 (Hold) have increased 8.3% compared with the industry’s rise of 8.5% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3 More Retailers’ Holiday Sales Reports

Macy’s (NYSE:M) comparable sales on an owned plus licensed basis decreased 0.6% during November and December period combined, while on an owned basis, comparable sales fell 0.7%.

Urban Outfitters (NASDAQ:URBN) witnessed comparable Retail segment net sales increase of 3% for the two months ended Dec 31, 2019.

J. C. Penney (NYSE:JCP) reported comparable store sales decline of 7.5% for the combined nine-week period ending Jan 4, 2020.

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