Victoria's Secret

The Angels are soaring.  

L Brands, parent company to Victoria’s Secret, beat earnings expectations Wednesday evening, causing company shares to rise by as much as 15 percent during after-hours trading.

But there’s a secret: the gains were felt almost exclusively in the company’s Bath & Body Works brand.

In fact, revenues at Victoria’s Secret online business fell 5 percent. In store, sales fell 7 percent. That’s on top of a 5 percent decline a year earlier. Meanwhile, revenues at Bath & Body Works rose for the quarter, both online and in stores, 13 percent and 7 percent, respectively.

Across the entire company, net sales for 2019’s first quarter were flat at $2.62 billion, the same as last year. Meanwhile, income for the three-month period ending May 4, was $40.3 million, down from $47.5 million a year earlier.

Still, it was enough for the company to raise its full-year guidance — to $2.30 to $2.60 earnings per share, up from $2.20 to $2.60 a share — and tame investor fears over worries about a slow turnaround.

That’s because, Victoria’s Secret, while still the market share leader in the women’s intimate apparel space, has been losing revenues for the last two years. Shares of L Brands, which closed down 5.2 percent Wednesday to $21.50 a piece, have fallen more than 39 percent year-over-year.

The company released a statement Wednesday saying, “performance continues to be mixed,” as it executes a number tactics to help turn the brand around.

“Although results were consistent with our guidance, we are clearly not satisfied and are working hard to improve performance,” the company stated in its prepared remarks.

The comeback strategies include adding John Mehas to the c-suite, shuttering stores, reintroducing swimwear online and even saying the famous fashion show might not return to network TV next year. L Brands, meanwhile, has been shedding unprofitable divisions, including Henri Bendel and La Senza, and fending off activist investors.

Just how long it will take the company to feel the effects of these changes is yet to be seen. But Victoria’s Secret massive scale might buy it some much needed time.

“All in, we see the team as taking steps toward making 2019 a year of much-needed change at [Victoria’s Secret],” Kate Fitzsimons, an analyst at RBC Capital Markets, wrote in a recent note. She rated L Brands stock “outperform.”

“We were encouraged by the comments that the [Victoria’s Secret] team is making swift progress in 2019 and is feeling better positioned with assortments for holiday since the arrival of [Victoria’s Secret] head John Mehas earlier in the year.”  

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