L Brands Inc.’s August sales were better than analysts expected, but lower than last year as the company continues to see declines in the businesses it is leaving.
Total L Brands sales increased 3 percent to $852.9 million from last year’s $826.0 million and beat the Thomson Reuters estimate for an increase of 0.3 percent. This was also better than the previous guidance that sales would be flat in the month. L Brands comparable sales for August including e-commerce rose by 2 percent, while store-only comps were flat.
The merchandise margin rate for the total company was down significantly from last year as L Brands continues to reposition its beauty category. The company did not specify the amount. The company also said it was being promotional as it tries to drive business to beauty and the sport and bralette categories.
Victoria’s Secret comp sales including e-commerce were flat versus the estimate for negative 1.3 percent. Victoria’s Secret comps for just the stores fell 2 percent versus last year’s August increase of 6 percent. This was due to the decision to exit the swim and apparel businesses; excluding those categories sales were up 2 percent. There was strength in the Pink business, but it wasn’t enough to offset the drops in the swim and apparel.
Bath & Body Works turned in a solid month as comp sales including e-commerce rose 7 percent, easily beating the estimate of 3.4 percent and topping last year’s increase of 6 percent. Comp sales for stores only increased 5 percent, even with last year.
Looking ahead, Victoria’s Secret will focus on bralettes and Pink yoga/ath-leisure at the beginning of September and then switch to focusing on the Dream Angels collection by midmonth. Bath & Body Works will transition to its Pumpkin Fest theme this week.
L Brands warned investors that September comps would be flat.
L Brands stock has fallen 8 percent for the past year as the company has made efforts to restructure the company. The organization has been trimmed and as noted above certain categories have been closed.