Victoria’s Secret Reveals Mid-quarter Revenues; Updates Guidance

The Victoria’s Secret’s spin-off continues in full swing. 

Parent company L Brands, which includes the Bath & Body Works business, revealed a mid-quarter earnings update Tuesday after the market closed, with net sales increasing by nearly a billion dollars in the quarter to date. 

Total revenues for the nine weeks ending July 3, or L Brands’ second-quarter fiscal year 2021, were $2.35 billion, compared with $1.36 billion during the same period a year ago. By brand, Bath & Body Works revenues were more than $1.2 billion quarter to date, compared with $743 million last year, while Victoria’s Secret’s revenues were more than $1.1 billion, compared with $625 million. 

The company pointed out that 2020’s second quarter was negatively impacted — as nearly all retailers were — by temporary store closures during the pandemic. But sales during the first nine weeks of the current quarter also surpass 2019’s pre-pandemic sales of $2.1 billion. That’s an increase of 12 percent. 

Second quarter-to-date sales were also negatively impacted by a later start to both brands’ semiannual sales, compared with sales in 2019. 

L Brands now expects second-quarter earnings-per-share to be between $1.20 and $1.30 a piece, compared with its previous guidance of $0.80 to $1.00, as a result. 

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The company is anticipating second-quarter operating income of more than $400 million for the Bath & Body Works segment and more than $200 million for the Victoria’s Secret segment, which includes the lingerie, beauty and Pink divisions, thanks to better-than-expected merchandise margin rates, disciplined inventory management, reduced promotional activity and positive consumer response to the updated assortment. 

Still, shares of L Brands, which closed down 3.19 percent Tuesday to $74.12 a piece, fell nearly 2 percent during after-hours trading. Year-over-year, shares are up nearly 345 percent. 

Also on Tuesday, L Brands revealed that founder and former chairman emeritus Leslie H. Wexner began the process of a secondary offering of more than 20 million shares. Following the closing of the offering, the company agreed to repurchase an aggregated 10 million shares of common stock from one of the shareholders, L Brands said in a statement, with J.P. Morgan acting as the sole “book-running manager” of the offering.  

Earlier this month, the L Brands’ board approved the spin-off of the lingerie brand, which is set to take place in August. The move puts Victoria’s Secret on the New York Stock Exchange as a stand-alone firm, under the stock ticker “VSCO.” In addition, L Brands Inc. will soon become Bath & Body Works Inc., with the stock ticker going from “LB” to “BBWI.”

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