L Brands Inc. (LB, Financial) shares lost about 9% in Thursday trading after the company reported second-quarter EPS of 48 cents on revenue of $2.76 billion, beating profit estimates by four cents per share and revenue expectations by $10 million.
Operating income was $300.9 million, down from $408.2 million last year. Net income was $138.9 million, down from $252.4 million in the prior-year quarter. For the quarter, total net sales were $2.755 billion, a 4.9% decrease from $2.89 billion in the comparable quarter of 2016. Comparable sales declined 8% due to the decision to exit swim and apparel categories. Sales at Victoria’s Secret stores were down 8% to $1,351 million while Victoria's Secret direct sales decreased 26% to $295.3 million. Total Victoria’s Secret sales fell 12% to $1,646.3 million. Comparable sales declined 14%.
Adjusted gross profit dropped 8% to $1,027.9 million and the gross margin declined 120 basis points to 37.3%. Further, adjusted operating income declined 26% to $300.9 million and the operating margin fell 320 basis points to 10.9%.
Guidance for the remainder of the year is more conservative. The company lowered its profit outlook for the full year. Full-year EPS is expected to range between $3 and $3.20, down from between $3.10 and $3.40 previously. EPS guidance for next quarter is between 25 cents and 30 cents.
Year to date, shares have fallen from $66.58 to $35, a 48% decline.
Disclosure: The author holds no positions in any stocks mentioned
