Shares of L Brands Inc. (LB, Financial) were up 3.40% at $16.43 in extended trading on Wednesday after the fashion retailer issued adjusted earnings of 2 cents per share for the third quarter. Results were in line with estimates, but down from earnings of 16 cents per share a year ago.
Third-quarter revenue of $2.68 billion, which was down 3.2% year over year, fell $10 million short of expectations.
By segment, L Brands reported the following year-over-year changes in total sales and same-store sales, including retail stores owned by the company in North America and overseas (the U.K. and China) and direct sales.
Victoria’s Secret sales declined 7.6% to $1.41 billion and Bath & Body Works’ sales dropped 11.3% to $1.06 billion. International sales for the two flagship brands, which include Chinese direct sales, wholesale sales and royalties on sales from franchised retail stores, decreased 0.4% to $133.4 million. Further, other sales fell 57% to $67 million.
Victoria’s Secret’s same-store sales slid 500 basis points to a 7% decrease in the third quarter of fiscal 2019 from a 2% decrease in the prior-year quarter. Bath & Body Works’ same-store sales deteriorated 400 basis points to a 9% increase versus a 13% increase. Thus, L Brands’ same-store sales fell 600 basis points to a 2% decrease.
Additionally, the operating income margin was -5.65% of total net sales in the third quarter compared to 1.96% of total net sales a year ago.
Looking ahead, the company is expecting to post adjusted earnings per diluted share of $2 in the final quarter of fiscal 2019 versus estimates of $1.97 and to close the year with earnings of $2.40 per share versus estimates of $2.39. The previous earnings guidance for the year was $2.30 to $2.60 per share.
While shares rose on the back of the updated guidance on Wednesday, the stock has fallen 38% so far this year to below the 120-day simple moving average line. The closing price of $15.89 on Wednesday is still near the 70- and 50-day lines. L Brands has a market capitalization of $4.39 billion.
The 52-week range is $15.8 to $34.89.
The 14-day relative strength index of 35 suggests the stock is close to oversold levels.
Moreover, the company will pay a quarterly cash dividend of 30 cents per common share on Dec. 6 to its shareholders of record as of Nov. 22, generating a 6.98% forward yield and 9.44% trailing 12-month yield as of Wednesday, Nov. 20.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- 3 High-Earnings Yield Stocks to Consider
- 3 Stocks With Fast-Growing Earnings
- Newmont Goldcorp Is Poised to Outperform
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
