Victoria’s Secret parent L Brands Inc. is putting at least some tax windfall back into its workers’ pockets.
While weighing in with fourth-quarter results, the retailer projected that its earnings per share this year would range from $2.95 to $3.25.
“This forecast reflects the benefit of a lower tax rate due to tax reform legislation and an incremental investment in wages and benefits, principally for hourly associates, of approximately $100 million,” the company said.
In an increasingly challenging retail market, merchants are trying to improve their customer service to compete and are increasingly willing to pay more to draw better associates. Walmart Inc. also indicated it would spend some of its tax savings to beef up its workforce.
L Brand’s annual earnings projection straddled the $3.15 consensus estimate from Wall Street, but investors were hoping for a little more and the stock fell 7.8 percent to $45.50 in after-hours trading.
The firm’s fourth-quarter net income increased 5.1 percent to $664.1 million, or $2.33 a diluted share, from $631.7 million, or $2.18, a year earlier.
Adjusting for a $92.2 million boost attributed to the new tax law and other special items, the company said its earnings increased 2 percent to $600.6 million, or $2.11 a share.
Sales for the 14 weeks ended Feb. 3 rose 7.4 percent to $4.82 billion from $4.49 billion.
The company’s fourth-quarter take was boosted by an extra week compared with the year-ago period.
For the full year, the company’s sales inched up 0.5 to $12.63 billion as net income slipped 15.1 percent to $983 million, or 3.42 a share. Adjusted earnings per share fell to $3.20 from $3.74.
L Brands has been working to turnaround operations and is starting to cycle through a decision to ditch its apparel and swim offerings to focus on its core business.
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