At Victoria’s Secret, where it’s all about the bra, brisk sales of the garment helped corporate parent L Brands (LB) earn record third quarter income that beat analyst expectations.
The Columbus, Ohio-based parent of Victoria’s Secret, PINK, La Senza, Henri Bendel and Bath & Body Works reported sales for the three-month period ended Oct. 31 that rose 7 percent to $2.48 billion from $2.32 billion in the prior year period. Sales at Victoria’s Secret rose almost 8 percent to $1.57 billion, or 63 percent of total revenue, up from up from 62 percent in the corresponding quarter of 2014.
Victoria’s Secret CEO Sharen Turney told analysts on the quarterly earnings conference call that bra sales at Victoria’s Secret, PINK and Victoria’s Secret Sport were up collectively by mid-double-digits, citing very successful Body by Victoria and Wear Everywhere bra debuts. Turney also said that PINK enjoyed a record back-to-school results.
Comparable store sales increased 7 percent, driven by a 7 percent increase at Victoria’s Secret/PINK.
Gross margin increased by over 70 basis points, to 41.6% of revenue.
Operating income increased 19 percent to $338.8 million compared to $284.1 million last year, and net income increased by 25 percent to $164 million, or $0.55 per diluted share, from $131.8 million, or $0.44 per share, in the prior year period.
Chairman and CEO Leslie H. Wexner said in a statement, “We delivered record results in the third quarter. Our brands are differentiated and have high emotional content and we continue to deliver new, compelling merchandise in an exciting in-store experience. We remain focused on executing fundamentals and staying close to our customers. We are pleased with our month-to-date performance and we are well-positioned for the most significant part of our year which is in front of us.”
The company raised its adjusted full-year earnings forecast by $0.06 to $0.11 per share to between $3.69 and $3.79 per share.
The company operates more than 3,000 owned stores in the U.S., Canada and U.K., including 1,150 Victoria’s Secret and 145 La Senza stores in Canada, and sells its brands through an additional 700 non-company-owned locations worldwide.
In the current fiscal year, total square footage will increase by 3 to 4 percent. Victoria’s Secret is expected to add 26 new stores in the period, and existing select existing stores will be expanded.