L Brands sees profits fall 50% in first quarter of 2018, reduces outlook
Columbus, Ohio-based apparel group L Brands, Inc. reported an 8% rise in sales in Q1 2018, driven by strong comps at Bath & Body Works, but saw net income fall by half, leading the company to revise down its full year outlook.
As previously reported, net sales for the first quarter ended May 5, 2018 totaled $2.626 billion, up from the $2.437 billion reported in the prior year period. Comparable sales increased 3%, with L Brands’ Bath & Body Works business leading the way with comps growth of 8%. The company’s Victoria’s Secret business fared less well, only seeing a 1% increase in comparative sales over the period, although this is still a solid improvement when compared to the 14% decline registered by the brand in Q1 2017. Nonetheless, due to increased administrative and operational expenses, L Brands’ operating income for the first quarter came to $154.8 million, down from $209.2 million in the same period in the previous year. Net income therefore totaled $47.5 million, a 50% decrease from $94.1 million in Q1 2017, with earnings per share (EPS) falling from $0.33 to $0.17. Due to this decline in profits, L Brands has decreased its full year outlook for EPS from between $2.95 and $3.25, to between $2.70 and $3.00, with Q2 EPS expected be between $0.30 and $0.35. Having opened 14 new stores during the first quarter and closed 20, the company currently operates 3,069 stores in the US, Canada, the UK, Ireland and Greater China. Its products are also sold in 830 franchised locations around the world, as well as through its dedicated branded e-commerce sites.