How L Brands Performed in the Second Quarter



Snapshot of the series

L Brands (LB) reported financial results for the second quarter of 2018 after the market closed on August 22, 2018. The results relate to the three-month period ending August 4, 2018.

The company did better than Wall Street top-line and bottom-line expectations. Its adjusted diluted earnings per share fell 29% YoY (year-over-year) to $0.36 but were two cents more than the consensus forecasts. Sales were up 8.3% YoY to $2.63 billion, beating analyst projections by $54 million.

The company has done better than Wall Street’s sales expectations over the last five quarters. However, it missed on bottom-line expectations in one of these five quarters. Read part two and three of this series to know more about the company’s second-quarter performance.

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Stock market reaction

Despite the earnings beat, L Brands’ stock price plunged 11.4% to close at $28.25 on August 23. Behind this decline was the management’s disappointing guidance, which came in way below analysts’ expectations. The company also reported that Denise Landman, the chief executive officer of its Pink brand, would retire at the end of this year.

L Brands is down 53% YTD (year-to-date) and is the top loser in the S&P 500 Index this year. Read part four to know more about the management’s revised guidance and the company’s stock market performance. A host of analysts lowered L Brands’ price target after the results. Read part five to know more.

About L Brands

L Brands is an American fashion retailer that sells women’s intimate wear, personal care products, beauty, and home fragrances. The company owns the well-known Victoria’s Secret and Bath & Body Works brands as well as La Senza, Henri Bendel, and Pink.

With TTM (trailing-12-month) revenues of more than $13 billion, L Brands operates 3,076 company-owned specialty stores and more than 800 franchised locations worldwide. The company recorded a market capitalization of $8.82 billion on August 22.

Investors who want exposure to LB can consider the Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF (RCD), which invests 1% of its portfolio in LB.


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