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L Brands Reports Strong Q4 Despite Decline in January

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L Brands Victoria's Secret

L Brands’ decision to shift Victoria’s Secret’s semi-annual sale from January to December may have backfired, but it didn’t stop the Columbus, Ohio-based company from achieving net sales of $4.4 billion in the fourth quarter. That’s an increase of 8 percent from the $4.1 billion it reported a year ago.

The parent of Victoria’s Secret, Pink, Bath & Body Works, La Senza and Henri Bendel said Thursday that comparable store sales for the three months ended Jan. 30 were up 6 percent. However, same-store sales for the final four weeks of the quarter decreased 2 percent as a result of moving the aforementioned biannual blowout to the last week of December.

That’s not exactly what L Brands had in mind when it announced the earlier start date during an earnings call last November: The plan was to propel sales and clean out inventory to better position the chain for Valentine’s Day.

Yet despite the decline in company comps, total net sales for the month of January were $811.3 million, a 4 percent increase compared to $783.1 million last year.

Meanwhile, net sales for the year ended Jan. 30 were $12.2 billion, up 6 percent from the prior year’s $11.5 billion, and same-store sales grew 5 percent.

“We achieved our best year ever in 2015. I am very appreciative of the focus on our customers, the excellent execution and teamwork across the enterprise that drove this result,” Leslie Wexner, chairman and CEO, said in a statement.

To that end, L Brands raised its fourth quarter earnings to about $2.05 per share, above its previous guidance of $1.85 to $1.95 per share. In addition, the company is increasing its annual ordinary dividend by 20 percent to $2.40 per share from $2.00 per share, as well as a special dividend of $2.00 per share.

“The dividend and share repurchase actions announced today reflect confidence in our growth opportunities and commitment to delivering shareholder value,” Wexner continued.

With that being said, the company said it expects earnings in 2016 to be negatively impacted by $0.10 per share in incremental interest expense related to its $1 billion October 2015 note issuance and by continued pressure from foreign currency exchange rates.

L Brands’ stock (LB) opened Friday at $88.13 and had fallen to $85.06 by close of market. The company will report its full fourth-quarter earnings on Feb. 25.

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