L Brands Inc. (NYSE: LB) reported a 62% dip in earnings for the second quarter due to lower sales and wider other loss despite lower costs and expenses. The bottom line exceeded analysts’ expectations while the top line missed consensus estimates. However, the company guided third-quarter earnings below the Street’s view.
Net income plunged by 62% to $37.6 million or $0.14 per share. The results included a charge related to the early extinguishment of debt. Adjusted earnings decreased by 33% to $0.24 per share.
Revenue declined by 3% to $2.9 billion. Comparable sales declined by 1% for the second quarter and comparable store sales decreased by 4%. This was due to decline at Victoria’s Secret.
Looking ahead into the third quarter, the company expects bottom-line results to be between a loss of $0.05 and a profit of $0.05 per share. For the full year 2019, the company reiterated its earnings guidance in the range of $2.30 to $2.60 per share.
For the second half of the year, the company’s number one priority continues to be improving performance at Victoria’s Secret. For the third quarter, the company expects comps to be down low-single-digits to up slightly. For the fourth quarter, comps projection will increase between 1% and 4% with a lower gross margin rate and flat SG&A rate. This will result in an EPS range of $1.95 to $2.15 for the fourth quarter.
For the second quarter, sales for Victoria’s Secret segment were $1.61 billion, and comp sales decreased 6%, including a 9% decline in store comps, driven by declines in traffic and average unit retails. Total digital sales rose by 4%. The segment was impacted by the liquidation of non-go-forward merchandise, the decline in Pink apparel sales, the exit of the swim business, and a slight decline in the mist business.
Sales for the Bath & Body Works segment were $1.061 billion, up 10% from last year. Comps increased 8% on top of 10% last year. The company grew each of its three main business categories – body care, home fragrance, and soaps & sanitizers – in the quarter.
In the international segment, revenue increased by 6% to $154.5 million. The Bath & Body Works drove revenue in its partner business higher. The company saw some stabilizations in the UK comps for its company-owned businesses. The new stores and growth in the digital business drove revenue in China higher.