(Filed Under Financial and General Interest News). Victoria’s Secret parent L Brands today said it expects to report a rare net loss when it announces its third quarter results later this month, a large part of it due to “an approximate pretax non-cash impairment charge of $80 million related to certain Victoria’s Secret store assets.”
This will be the first time in over a decade that L Brands has reported a quarterly loss.
Meanwhile, comparable store sales at Victoria’s Secret and Pink in the U.S. and Canada fell 7% in October. But when the surging direct sales for the two brands are included with the store results, the total came in about the same as last October.
For the entire third quarter, comparable store and direct sales, in the two countries, for the two brands, fell 2%, while store-only sales fell 6%.
L Brands recently announced it was closing its Henri Bendel stores and that it was considering all options for its money-losing La Senza lingerie brand.
L explained that, company wide, it expects “a third quarter loss per share of approximately $0.17. The reported loss per share includes a total charge of approximately $0.32 per share, which consists of an approximate pretax cash charge of $20 million related to the closure of its Henri Bendel business,” in addition to the Victoria’s Secret impairment charge.
“Excluding these charges, the company expects adjusted third quarter earnings per share to be approximately $0.15, compared to its previous guidance of $0.00 to $0.05, principally driven by out performance at Bath & Body Works.” The earnings call is scheduled for November 20.
Total third quarter sales for Victoria’s Secret and Pink company-owned stores in the U.S. and Canada fell from $1.243 billion to $1.179 billion, while the direct business for the two brands rose from $295.9 million to $351.0 million. The combined total fell from $1.539 billion to $1.529 billion.
L Brands, benefiting from its strong Bath & Body Works business, announced “net sales of $2.775 billion for the 13 weeks ended November 3, 2018, an increase of 6 percent, compared to net sales of $2.618 billion for the 13 weeks ended October 28, 2017.” In addition it recorded “sales of $8.385 billion for the 39 weeks ended November 3, 2018, an increase of 7 percent” over the same period last year.
Commenting on the results for Victoria’s Secret and Pink, Amie Preston, chief investor relations officer, stated that in October “the merchandise margin rates was down significantly to last year, driven by increased promotional activity.” She added, “in November we will focus on our casual sleep collection in the lingerie business and holiday apparel in the Pink business.” — NM
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