Victoria’s Secret parent L Brands Inc. used its mix of sexy and retail savvy to drive solid sales and profit gains last year, but came up a little light in its first-quarter projections.
That forward-looking caution — which is not unusual for the company — caused investors to hit the sell button and the stock slipped 2.6 percent to $81 in after-hours trading Wednesday.
The company’s fourth-quarter profits gained 12.6 percent to $636 million, or $2.15 a diluted share, from $564.8 million, or $1.89, a year earlier. Earnings came in 10 cents ahead of the $2.05 analysts projected. Sales for the three months ended Jan. 30 rose 8 percent to $4.4 billion from $4.07 billion.
For the full year, L Brands’ profits rose 20.3 percent to $1.25 billion as sales increased 6.1 percent to $12.15 billion.
Related Galleries
Chairman and chief executive officer Leslie Wexner, indulged in a little retail trash-talking following the solid results.
“We delivered record results in a year when many retailers struggled,” Wexner said. “These results are a reflection of the strength of our brands and were driven by tremendous focus and execution across the enterprise. I am very optimistic heading into 2016 and confident in our growth opportunities.”
He takes the reins as the chain continues grab market share in the intimates space, with sales gaining 6.4 percent to $7.67 billion last year. Bath & Body Works’ sales rose 7.1 percent to $3.59 billion.
For the first quarter, L Brands is looking for earnings per share of 50 cents to 55 cents — shy of the 65 cents Wall Street had penciled in.
That disparity might well be more about setting expectations than planning the business.
Nomura analyst Simeon Siegel, in what he called “A Guide to Guidance” this month, noted that the company tops its own projections 91 percent of the time and then “almost always guides below [Wall Street expectations] and then goes on to beat the original expectations.”
“L Brands is one of the best at underpromising and overdelivering,” Siegel noted. “They’ve only missed the high-end of [their] guide twice in the past 23 quarters.”
That means that L Brands is either very bad at projecting how their business will perform or very good at playing the Street.