Consumers opened up their wallets at Victoria’s Secret and Bath & Body Works stores in the fourth quarter, and on Thursday their parent company shared some of the benefits with shareholders.
L Brands Thursday reported solid comparable-store results for January and the fourth quarter, raised its profit estimate for the period and then increased its quarterly dividend and declared a special $2-a-share dividend.
The company’s board also authorized $250 million for stock repurchases, including $91 million still remaining from its last buyback allotment. The ordinary annual dividend was increased by 47 percent, to $2 a share from $1.36.
Fourth-quarter earnings are expected to come in at between $1.78 and $1.80 a diluted share, up from $1.61 and $1.71.
Comp results for January raced past analysts’ consensus estimates. Overall comps for the month were up 7 percent, versus analysts’ estimates for a 1.9 percent gain, with Victoria’s Secret ahead 4 percent and Bath & Body Works moving into double-digit territory with a 16 percent gain. According to analysts polled by Thomson Reuters, VS was expected to be up 1.6 percent and Bath & Body Works 1.8 percent.
The comp numbers, coming as L Brands concluded its fiscal year, also showed strong sequential improvement. The overall gain of 7 percent was better than the 6 percent gain for the quarter or 4 percent gain for the year, while Victoria Secret’s 4 percent upward move matched its quarterly result and exceeded its 3 percent gain for the year.
Victoria’s Secret’s direct sales fell 4 percent during the month, 2 percent during the quarter and 1 percent during the year. The company phased out most of the noninnerwear it sells online during the year.
Net sales for the year totaled $11.45 billion, 6.3 percent above the $10.77 billion reported in 2013. Victoria’s Secret stores accounted for more than half of the total, rising 6.2 percent to $5.7 billion.
Leslie Wexner, chairman and chief executive officer, said the dividend and share repurchase “reflect confidence in our growth opportunities and commitment to delivering shareholder value.”
Stifel analyst Richard Jaffe said the strong finish to the year, above management’s guidance for a low-single-digit increase in January, was “driven by a mixture of strong full-priced selling and solid semiannual sales at both BBW and VS. Merchandise margins were up significantly to last year.”
Amie Preston, L Brands’ chief investor relations officer, noted that inventory at cost was down 10 percent on a per-square-foot basis, boding well for first-quarter margins.
The news helped lift L Brands’ shares $4.68, or 5.4 percent, to $91.19. They hit a 52-week high of $92 in midday trading.
Stein Mart Inc., which reported a 6.6 percent comp increase for January versus a 4.5 percent estimate, declared a special dividend of $5 a share for its shareholders after reworking terms of its credit facility with Wells Fargo.
“Sales continued to build throughout the quarter, particularly as we did not have a repeat of last year’s severe weather events,” commented ceo Jay Stein.
Stein Mart’s shares closed at $15.76, up $1.56, or 11 percent, after hitting a 52-week high of $16.53 earlier in the day.