Why L Brands Earnings Fell Flat

By Chris Lange Updated Jan 11, 11:13PM EST · Published May 24, 8:30AM EDT

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Why L Brands Earnings Fell Flat — © Thinkstock

L Brands Inc. (NYSE: LB) released its fiscal first-quarter results after the markets closed on Wednesday. Despite decent quarterly results, it wasn’t enough to offset especially weak guidance. By the looks of it, the rest of 2018 won’t be any easier for this retailer.

The company posted $0.17 in earnings per share (EPS) on $2.63 billion in revenue, while consensus estimates from Thomson Reuters had called for $0.18 in EPS and $2.59 billion in revenue. The same period of last year reportedly had $0.33 in EPS on $2.44 billion in revenue.

During the quarter, comparable sales increased 3%, much better than the 9% decrease seen in last year’s first quarter. The latest increase consisted of Victoria’s Secret comps increasing only 1% but Bath & Body Works comps increasing 8%.

In terms of its segment sales, the company reported as follows:

Victoria’s Secret sales decreased 5% year over year to $1.59 billion.
Bath & Body Works sales increased 5% to $760.4 million.

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Looking ahead to the 2018 fiscal full year, the company actually decreased its guidance. L Brands now expects to see EPS in the range of $2.70 to $3.00, down from the previously issued guidance of $2.95 to $3.25. The consensus estimates call for $3.14 in EPS and $13.1 billion in revenue for the year.

As for the second quarter, EPS is expected to be between $0.30 and $0.35. Consensus estimates are $0.45 in EPS and $2.89 billion in revenue.

Excluding Thursday’s move, L Brands has vastly underperformed the broad markets, with its stock down about 32% in the past 52 weeks. In just 2018 alone, the stock is down over 43%.

Shares of L Brands closed Wednesday at $34.05, with a consensus analyst price target of $44.83 and a 52-week trading range of $30.70 to $63.10. Following the announcement, the stock was down 5% at $32.30 in early trading indications Thursday.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.