What Drove L Brands’ 4Q17 Top Line?



L Brands beats 4Q17 top-line expectations

L Brands (LB) reported its 4Q17 financial results on February 28, 2018. The company’s total sales increased 7.4% YoY (year-over-year) to $4.82 billion due to 2% growth in same-store sales. The extra week in fiscal 2017 contributed $160 million towards L Brands’ top line during the quarter.

The total sales for fiscal 2017 increased 0.5% YoY to $12.63 billion. The sales comps for fiscal 2017 declined 3% on a comparative 53-week basis. Victoria’s Secret’s exit from the swim and apparel categories had a negative impact on the total comps by three percentage points during the year.

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Victoria’s Secret and Bath & Body Works

Victoria’s Secret’s comparable sales fell 1% during 4Q17. The performance of the brand’s brick-and-mortar stores was even worse. The comps fell 6% during the quarter.

However, Victoria’s Secret recorded a steady improvement in its performance through the year. Direct and store comps were down 14% during the first two quarters and 4% during the third quarter.

Jan Singer, Victoria’s Secret’s CEO, discussed the improvement during the 4Q17 earnings call. She said, “While results overall were down, we improved sales and margin throughout the year from down high single-digits in Q1 to down mid- single-digits in Q4. This progress was led by a deep focus on the customer and products, starting with the core, our bra business.”

For fiscal 2017, Victoria’s Secret comps fell 8%. The brand accounted for 58% of the company’s total sales during the year.

Bath & Body Works, L Brands’ second-largest brand, posted strong results. Bath & Body Work’s comps rose 6% for the quarter and 5% for the year. The brand’s net sales rose 11% during 4Q17.

The brand also recorded an impressive growth in its operating income. Next, we’ll discuss the operating income in more detail.


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