Why L Brands Earnings Beat Is Not Enough
Shares of L Brands tumbled even though it reported better-than-expected fiscal second-quarter financial results.
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When L Brands Inc. (NYSE: LB) reported its fiscal second-quarter financial results after the markets closed on Wednesday, the retailer said that it had $0.48 in earnings per share (EPS) and $2.76 billion in revenue. That compares to consensus estimates from Thomson Reuters of $0.44 in EPS and revenue of $2.75 billion. In the same period of last year, the company posted EPS of $0.70 and $2.89 billion in revenue.
The second-quarter comparable sales decline of 8% was below the company’s expectations. The segment comparable sales broke down to a decline of 14% at Victoria’s Secret and an increase of 6% at Bath & Body Works.
In terms of the segments, L Brands reported as follows:
- Victoria’s Secret posted total revenues of $1.65 billion, a decrease of about 12% from last year.
- Bath & Body Works posted total revenues of $860.3 million, an increase of 7% year over year.
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L Brands’ guidance for the remainder of the year reflects a more conservative sales forecast than its previous outlook. The retailer updated its guidance for 2017 full-year EPS to $3.00 to $3.20 from $3.10 to $3.40 previously, and it issued guidance for third quarter EPS in the range of $0.25 and $0.30.
The consensus estimates call for $3.23 in EPS and $12.48 billion in revenue for the 2017 full year. For the third quarter, the consensus forecast is EPS of $0.36 and $2.59 billion in revenue.
Shares of L Brands were last seen down about 7% at $36.15 on Thursday, with a consensus analyst price target of $50.13 and a 52-week range of $35.77 to $79.67.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
