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L Brands Stock Fell in After-Hours Trading

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L Brands misses expectations, lowers outlook

L Brands (LB) stock fell more than 5% in the after-hours trading session on May 23. The company missed analysts’ earnings expectations and lowered its fiscal outlook.

The adjusted EPS (earnings per share) for the first quarter contacted ~48% YoY (year-over-year) to $0.17 and missed the consensus by $0.01. The total sales increased 7.8% YoY to $2.63 billion—better than analysts’ forecast of a 6.2% YoY jump to $2.59 billion.

The operating income fell 26% YoY to $155 million. The selling, general, and administrative expenses increased ~14% to $789 million during the quarter. The operating margin contracted by 270 basis points to 5.9% of sales.

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Guidance update

Management lowered its fiscal earnings outlook. Management expects the EPS to be $2.70–$3.00—compared to the previous guidance of $2.95–$3.25. The midpoint of the revised forecast also fell short of analysts’ expectations of $2.98 per share.

The second-quarter earnings estimate of $0.30–$0.35 was also below the consensus expectations of $0.40.

L Brands operates through 3,069 company-owned specialty stores and more than 800 franchised locations worldwide.

The company recorded trailing 12-month sales of $13 billion. L Brands has a market capitalization of $14 billion.

Investors looking for exposure to L Brands through ETFs can consider the Morningstar Wide Moat ETF (MOAT), which invests ~2% in the company.

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