L Brands Rises as Comparable Sales Surpass Expectations - Analyst Blog

Shares of L Brands, Inc. ( LB ) moved up 6.8% following comparable-store sales results for July, the four weeks ended Aug 2, 2014, that surpassed analysts' expectations. Comps of this specialty retailer of women's intimate and other apparel climbed 6%. The rate of growth sharply accelerated from 2% attained in June.

Net sales for July increased 8% to $735.3 million from $678.4 million in the prior-year period.

Most of the retailers benefited during the month under review due to increasing consumer confidence, improving job prospects and aggressive promotional strategies. Retailers such as Rite Aid Corporation ( RAD ), The Cato Corporation ( CATO ) and Walgreen Co. ( WAG ) saw their comparable-store sales increasing 4.6%, 4% and 5.2% respectively, during July.

Coming to L Brands, comparable-store sales for July rose 5% at Victoria's Secret Stores & Victoria's Secret Beauty and 7% at Bath & Body Works & The White Barn Candle Co. Sales rose 1% at Victoria's Secret Direct.

For the 26-week period ended Aug 2, net sales increased 6% to $5,067 million from $4,784 million in the year-ago period, while comparable-store sales grew 3%.

For the second-quarter of fiscal 2014, L Brands posted comparable-store sales growth of 3%, while net sales jumped 6% to $2,675 million from $2,516 million in the year-ago quarter.

Sales at Victoria's Secret Stores increased 6.4% to $1,363 million, whereas Victoria's Secret Direct sales fell 0.3% to $382.4 million. Total Victoria's Secret sales grew 4.8% to $1,745.4 million, while comps increased 3%. Bath & Body Works total sales jumped 5.5% to $704.7 million, with a 3% rise in comps. Victoria's Secret and Bath & Body Works International surged 71.3% to $79.3 million. Other revenue increased 6.9% to $145.9 million.

L Brands, which currently carries a Zacks Rank #3 (Hold) and operates about 2,942 company-owned stores, now projects a low single-digit comps increase for the month of August.

The company now anticipates second-quarter earnings to come in at the upper end of its earlier provided guidance of 57 cents to 62 cents a share, when its reports of Aug 20. The current Zacks Consensus Estimate for the quarter is 62 cents.

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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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