L Brands reports record Q1 results, issues business separation update

L Brands Inc. (NYSE: LB) said on Thursday its per-share earnings topped Wall Street expectations in the fiscal first quarter. Sales, however, matched estimates in Q1. L Brands offered fewer promotions in the recent quarter and saw an improvement in profit margins.

Financial performance

L Brands reported $277 million (£195.69 million) of net earnings in the first quarter that translates to 97 cents per share. In the comparable quarter of last year, it had posted $297 million of net loss, or $1.07 per share.

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Adjusted for non-recurring items, the fashion retailer noted per-share earnings of $1.25 versus the year-ago figure of 99 cents. L Brands generated $3.02 billion of sales in Q1 – an increase from $1.66 billion last year.

According to FactSet, experts had forecast the company to record $3.02 billion of sales and $1.17 of adjusted EPS. In separate news from the United States, multinational technology conglomerate Cisco also reported its quarterly financial results on Wednesday.

Q2 guidance and other notable figures

For the fiscal second quarter, L Brands expects its adjusted EPS to fall in the range of 80 cents to $1. The U.S. firm refrained from giving its guidance for the full year due to the ongoing COVID-19 uncertainty.

Other notable figures in L Brands’ financial update on Thursday include a 21% increase in total same-store sales. First-quarter comparable sales jumped 25% and 16% at Victoria’s Secret and Bath & Body Works respectively.

Business separation update

L Brands is scheduled to split into two independent, publicly traded companies, Victoria’s Secret and Bath & Body Works in August. Ahead of the spinoffs, the retailer named Wendy Arlin as the new CFO of Bath & Body Works. Tim Johnson, L Brands highlighted in a press release on Thursday, will serve as the CFO of Victoria’s Secret.

Arlin is already affiliated with L Brands as its senior vice president of finance. Johnson, on the other hand, is being brought from Big Lots, where he serves as the chief administrative officer. Stuart Burgdoerfer, who is currently serving as the CFO of L Brands, will retire when the company splits into two.  

Impact on the share price

L Brands opened at $67 per share in the stock market on Thursday and slipped to an intraday low of $63 per share in the next hour. In comparison, the NYSE-listed company had started the year 2021 at a much lower $40 per share.  

At the time of writing, L Brand has a market cap of $18 billion and a price to earnings ratio of 21.46.