Victoria’s Secret parent L Brands Inc. delivered third-quarter profits and sales that rose more than anticipated while providing a fourth-quarter outlook that trailed analysts’ expectations.
In the three months ended Nov. 1, the Columbus, Ohio-based intimate apparel giant reported net income of $131.8 million, or 44 cents a diluted share, 43.3 percent above the $92 million, or 31 cents, tallied in the third quarter of 2013.
Revenues rose 6.8 percent to $2.32 billion from $2.17 billion in last year’s period, with same-store sales, as reported earlier in the month, up 5 percent. Victoria’s Secret’s comps were ahead 3 percent and Bath & Body Works up a more robust 7 percent.
On average, analysts had expected EPS of 39 cents on sales of $2.31 billion. Earlier this month, the company lifted guidance for EPS to a range of 38 to 40 cents from earlier projections of between 26 and 31 cents.
The improvement came in part from the firm’s ability to navigate the choppy promotional waters of soft goods retailing. The bottom line received a boost from a 130 basis point pick-up in gross margin, to 40.8 percent of sales from 39.5 percent in the year-ago quarter.
The company furnished fourth-quarter guidance for EPS of between $1.61 and $1.71, consistent with previous projections but below the consensus estimate of $1.77.
L Brands provided the results without comment and is slated to hold a conference call this morning [Thursday] to discuss the results and guidance. When it reported October sales on Nov. 6, the company said it expected a low-single-digit comp for the current month.
In the quarter, total sales for the Victoria’s Secret brand were up 5.8 percent to $1.45 billion, with stores ahead 6.7 percent to $1.18 billion and direct sales up 2.2 percent to $274.7 million. The increase in the direct channel came despite its decision to pare its noncore apparel and beauty businesses. Victoria’s Secret stores in the U.S. and Canada posted a 3 percent comp increase, 1 point lower than the 4 percent advance in the 2013 quarter and despite a flat comp in October.
The international business for the two brands grew more than a third, expanding 33.8 percent to $80 million from $59.8 million in the year-ago period.
Bath & Body Works revenues were up 8.7 percent to $659.4 million, with comps ahead 7 percent in the three months.
For the year to date, net income rose 15.4 percent to $477.1 million, or $1.60 a diluted share, as sales added 6.2 percent to $7.39 billion. Same-store sales were up 3 percent, with Victoria’s Secret up 3 percent and Bath & Body Works up 4 percent.