(Filed Under Financial and General Interest News). Total third quarter Victoria’s Secret and Pink sales shrank to $1.353 billion, from $1.578 billion in the same period last year, with store and international sales down and direct sales sharply up.
Sales at Victoria’s Secret and Pink stores in the U.S. and Canada fell to $755.2 million in the three months ended October 31, 2020, compared to $1.081 billion in the quarter ended November 2, 2019.
Meanwhile, direct sales for the two brands rose to $470.0 million, up from $331.3 million in the same period last year.
In the third quarter, Victoria’s Secret International sales fell to $127.9 million from $165.3 million last year. According to the company, those “results include company-operated stores in the U.K. (pre-joint venture) and Greater China, royalties associated with franchised stores and wholesale sales.” Recently L Brands sold a majority stake in its U.K. and Ireland stores to a British retailer.
In the quarter, parent company L Brands (which also operates Bath & Body Works) reported a profit of $330.6 million on sales of $3.055 billion, compared to a loss of $252.0 million on sales of $2.677 billion in the same quarter last year.
L Brands CEO Andrew Meslow celebrated the “record third quarter, driven by exceptional results and continued strength at Bath & Body Works, and a significant improvement in performance at Victoria’s Secret.” He added, “as we head into the holidays, our inventories are well-positioned, and we are encouraged by customers’ early response to our merchandise assortments. However, we are cautious about our ability to exceed last year’s fourth quarter sales and earnings results, given anticipated constraints on store traffic, online fulfillment and shipping capacity, as well as other uncertainties related to the COVID pandemic. We are confident in the strength of our brands and remain focused on execution and delivering the best possible outcome for the fourth quarter.”
During the period between February 1 and October 31, the company closed 223 and opened 18 Victoria’s Secret stores in the U.S., reducing the total to 704, while in Canada it closed 10 shops reducing the total to 23. In the same period the company opened two and closed three Pink stores in the U.S. reducing the total to 143; while in Canada it closed three reducing the total to two.
In the conference call to discuss the quarter, L Brands CFO Stuart Burgdoerfer declared “we’ve been working hard, as you recognize, to stabilize and begin the turnaround at Victoria’s Secret. We had a very strong quarter in a lot of ways, including financially,” adding that “we think we’ve increased the value of the business. Absolutely we do. As businesses are valued off of historic and forward-looking EBITDA and cash flow, we made material progress on those measures in the third quarter and we would expect that the business is worth meaningfully more than it might have been in the recent past. We’re at the beginning. We’ve got a lot more to do. There’s a lot of additional growth and opportunity in the business, but there is no doubt that the third quarter was an important inflection point in the business.”
L Brands is in the process of separating Bath & Body Works from the lingerie portions of its firm, which it plans to make a separate company. In August it hired both JPMorgan and Goldman Sachs to enhance the process. — NM
The full conference call transcript can be found here: https://seekingalpha.com/article/4390428-l-brands-inc-lb-ceo-andrew-meslow-on-q3-2020-results-earnings-call-transcript
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