L Brands' February Comps Rise, Share Buyback Plan Announced

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L Brands, Inc.LB witnessed an increase in comparable sales (comps) for the third consecutive month as it reported February sales numbers. Comps for the four-week period (ended Mar 3, 2018) rose 3%, after registering an increase of 7% and 1% in January and December, respectively. We note that rate of comps growth has decelerated from the month of January.

Net sales, in the month under review, also surged 11.5% to $853.9 million. While, comps increased 2% at Victoria's Secret, the same at Bath & Body Works improved 7%.

Victoria's Secret merchandise margin rate decreased significantly in February primarily due to rise in promotional activities. However, in case of Bath & Body Works, merchandise margin rate was flat in the same time period compared with last year.

Moreover, L Brands announced new share buyback program worth $250 million, which includes $23.1 million remaining under the previous program.

Stock Performance

Ever since the company announced fourth-quarter results on Feb 28, shares of this specialty retailer of women's intimate and other apparel, beauty and personal care products have declined 15.6%. Moreover, in a month, the stock has declined 14.5% wider than the industry 's decrease of 0.5%. The decrease in stock price can be primarily attributed to soft first-quarter and fiscal 2018 outlook.

Per L Brands, first-quarter comps are anticipated to be in low-single digits. Sales are projected to be nearly 5 points higher than comps. Further, gross margin is expected to decline marginally due to a fall in merchandise margin rate, somewhat offset by lower buying and occupancy expenses. Earnings per share are envisioned in the range of 15-20 cents versus 33 cents in the year-ago quarter.

For fiscal 2018, this Zacks Rank #3 (Hold) company's Gross margin rate is anticipated to remain flat compared with the prior-year tally. Management projects earnings per share in the band of $2.95-$3.25 compared with $3.20 last year.

Key Picks

Abercrombie & Fitch Co. ANF has a long-term earnings growth rate of 11.5% and a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

The Children's Place, Inc. PLCE pulled off an average positive earnings surprise of 14% in the trailing four quarters. It has a long-term earnings growth rate of 9% and a Zacks Rank #2.

Foot Locker, Inc. FL posted earnings beat in the trailing two quarters.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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