Categories Research Summary, Retail, Trending Stocks
L Brands (LB) decides to spin off Victoria’s Secret instead of selling it
The company expects to report adjusted EPS of approx. $1.25 for Q1 2021
Shares of L Brands Inc. (NYSE: LB) were down over 4% in morning hours on Tuesday after the company announced its decision to spin off its Victoria’s Secret business into a separate company. The stock has gained 76% since the beginning of the year.
Spin-off
L Brands has decided to spin off its business into two separate, public companies – Bath & Body Works and Victoria’s Secret. The company will spin off the assets and liabilities of the Victoria’s Secret business to its shareholders through a tax-free transaction that is expected to be completed this August.
L Brands reviewed the option of either a spin-off or sale of the Victoria’s Secret business and had discussions with several potential buyers before deciding that a spin-off would provide more value than a sale. Post the spin-off, Bath & Body Works will be led by Andrew Meslow and Victoria’s Secret will be led by Martin Waters.
“Both Bath & Body Works and Victoria’s Secret are leaders in their respective markets, and, as separate businesses, each will be ideally positioned to benefit from a sharpened focus on pursuing growth strategies best suited to each company’s customer base and strategic objectives. With this in mind, the Board believes that this path forward will return the highest value to shareholders and that the separation will allow each business to achieve its best opportunities for growth.” – Sarah Nash, Chair of the Board
Preliminary Q1 results
L Brands also provided preliminary results for the first quarter of 2021. The company expects to report GAAP EPS of approx. $0.97 and adjusted EPS of approx. $1.25. The adjusted EPS number is ahead of the guidance range of $0.85-1.00 provided by the company earlier, reflecting strong sales and margins at the Bath & Body Works and Victoria’s Secret divisions, both of which benefited from stimulus payments and easing of the COVID-19 pandemic-related restrictions.
L Brands generated net sales of $3 billion for the first quarter of 2021 compared to $1.6 billion in Q1 2020. Last year’s results were impacted by store closures brought on by the pandemic. Q1 2021 sales increased 15% from the same period in 2019.
Net sales at Bath & Body Works totaled $1.4 billion in Q1 compared to $760.6 million last year. Q1 2021 sales increased 60% compared to Q1 2019. Victoria’s Secret’s net sales amounted to $1.5 billion in Q1 2021 compared to $893.6 million in Q1 2020. Sales dropped 7% compared to Q1 2019, reflecting the closure of 233 stores over the past two years.
Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!
Most Popular
Infographic: Amazon (AMZN) Q4 2024 earnings beat estimates; sales rise 10%
E-commerce giant Amazon.com Inc. (NASDAQ: AMZN) on Thursday reported higher sales and profit for the fourth quarter of 2024. Earnings also beat analysts' estimates. Net sales increased to $187.8 billion
Philip Morris (PM) delivers strong performance in 4Q24 helped by smoke-free strength
Shares of Philip Morris International Inc. (NYSE: PM) jumped 10% on Thursday after the company delivered better-than-expected earnings results for the fourth quarter of 2024 and provided an encouraging outlook
Highlights of Bristol-Myers Squibb’s Q4 2024 earnings report
Biotechnology company Bristol Myers Squibb (NYSE: BMY) reported lower profit for the fourth quarter of 2024, despite an increase in revenue. Net income attributable to shareholders was $72 million or