Retail stock under pressure: L Brands Inc (NYSE: LB)

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L Brands Inc (NYSE: LB) stock fell 7.51% after the company posted bigger loss for the third quarter of FY 19 on the back of higher costs and expenses though the company has delivered in line results in the period. L Brands has posted the loss of $252 million, in the quarter, compared to a loss of $43 million, in the year-ago quarter. The stock recovered over 3.6% in the pre-market session of November 21st, 2019 (Source: Google finance)

LB in the third quarter of FY 19 has reported the adjusted earnings per share of 2 cents, which is in line with the analysts’ estimates for the adjusted earnings per share of 2 cents, according to Analysts polled by FactSet. The company had reported 4 percent fall in the adjusted revenue to $2.68 billion in the third quarter of FY 19, which is also in line with the analysts’ estimates for revenue of $2.69 billion. Comparable sales declined by 2% for the third quarter and comparable store sales fell by 3% due to a decline in Victoria’s Secret. For the third quarter, the company delivered the sales for Victoria’s Secret segment of $1.41 billion, and comp sales fell by 7%, that also includes an 8% decline in store comps, due to decrease in traffic and average unit retails. Total digital sales fell by 6% during the period.

Moreover, the Sales for the Bath & Body Works segment has posted the growth of 11% to $1.064 billion. Comps have risen by 9% and store-only comps have increased by 5%. Sales performance was balanced across the quarter. The customers of the company have responded well to its merchandise assortment with all major merchandise categories growing relative to last year.

In the international segment, revenue was about flat compared to last year at $133.4 million. The company continues to be confident about its prospects for growth in international markets and continues to remain focused on the fundamentals.

L Brands expects fourth-quarter per-share earnings to be about $2, which would result in full-year adjusted EPS of about $2.40. That compared to a previous full-year guidance between $2.30 a share and $2.60 a share.

Meanwhile, for the holiday season, the company does not intend for aggressive promotional activity from last year. The company will continue to remain agile in reading the business and will respond with appropriate promotional activity to boost traffic and manage inventory levels while optimizing its margin dollar result.

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