Dive Brief:
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L Brands Inc., including brands Victoria’s Secret and Bath & Body Works, Wednesday reported that Q3 profit increased 24% and gross margin rose to 41.6% from 40.8%. Q3 same-store sales rose 7%, aided most by Victoria’s Secret, which also saw same-store sales growth of 7% while Bath & Body Works same-store sales rose 6%. Revenue increased 7% to $2.48 billion, edging past analyst expectations of $2.49 billion.
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Sales at stores open at least a year increased by 7%. At Victoria’s Secret, which generates the bulk of the company’s revenue, sales at established stores grew 7%, while sales at Bath & Body Works improved 6%
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The company raised its guidance for the year from between $3.58 to $3.73 per share to $3.69 to $3.79 per share, but its guidance for the holiday quarter, which it pegged between $1.85 to $1.95 missed Thomson Reuters estimates for per-share profit of $1.98.
Dive Insight:
L Brands CEO Leslie H. Wexner demonstrated a fair bit of swagger in talking to investors Tuesday, so the company’s upbeat report isn’t much of a surprise.
Wexner Tuesday stressed the importance of brick and mortar to retailers’ success, insisting that attention to stores is of utmost importance, even compared to e-commerce, which appears to be seeing higher growth than retail overall.
Victoria’s Secret has seen increased competition from American Eagle’s Aerie brand, which is also doing well by that company. The lingerie category appears to be doing fairly well compared to other apparel sales; perhaps for that reason L Brands said it had de-emphasized apparel sales in favor of lingerie.
