Victoria’s Secret and Urban Outfitters Inc. both showed signs of sales life on Thursday.
Victoria’s Secret, a division of L Brands Inc., saw comparable-store sales grow 4 percent in January, compared with a 10 percent decline the same time a year ago and even a 1 percent decline during December’s holiday season.
The gains were a sign that the brand might finally be on the upswing after months of slipping sales.
Investors were pleased, and shares of the company jumped 4.9 percent in pre-market trading, although the stock ended the day down 2.7 percent at $47.77 amid a rout the signaled the market was in a correction.
Urban Outfitters said its sales for the fourth quarter increased 5.7 percent to $1.09 billion with a 4 percent increase in comp retail sales and double-digit gain on the web. Retail comps rose 8 percent at the Free People Unit, 5 percent at Anthropologie and 2 percent at Urban Outfitters. Shares of Urban Outfitters fell 4.7 percent to $32.36 before the sales update after the market closed.
Amie Preston, L Brands’ chief investor relations officer, said sales in lingerie, the Pink brand and beauty were up during the month. Sales for the fourth quarter, too, rose 4 percent to $2.67 billion, bolstered by a 20 percent increase in direct, or online, sales. Victoria’s Secret comps still fell 1 percent and for the whole of last year, comps fell 8 percent after being flat in 2016. The January results mark one of the first months L Brands has not cited the mid-2016 decision to pull swim and apparel from Victoria’s Secret as cause for a drag on sales.
And February could see the retailer maintain some momentum, as it pushes Valentine’s Day at Victoria’s Secret and spring break at Pink.
Overall, net sales at L Brands, which also operates Bath & Body Works and Henri Bendel, came in at $1.04 billion for the four weeks ended Jan. 28, compared with sales of $805.2 million a year ago. Total comp sales rose 7 percent.
Sales during the fourth quarter also grew to $4.82 billion , compared with $4.49 billion during the same period last year, but comparable sales only grew 2 percent, the company said.
This led L Brands to increase its fourth-quarter guidance to earnings per share of $2.05 from $2, but that does not take into account any impact from the Trump administration’s new tax legislation, which mainly offers a corporate tax rate at one the lowest rates in decades.
Preston said L Brands is expecting an effective tax rate of 34 percent, down from a previous rate of 36.5 percent.
But going forward, the company said, while it will continue to report monthly sales, it will not be providing comp guidance on a monthly basis and Preston said L Brands expects to “manage the business for low-single-digit comp growth.”
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