L Brands Bucks Retail Trend, Posts 5% Sales Growth

L Brands Inc. lifted its view for the year as revenue topped expectations, a bright spot in a retail industry grappling with falling foot traffic and growing competition.

The Ohio-based owner of Victoria's Secret and Bath & Body Works, in addition to its namesake banner, said total sales rose 5% in its June quarter. A 3% rise in existing-store sales was behind the increase, thanks to an improvement in Victoria Secret sales and continued strength in the bath and body business.

Shares climbed 3.3% in after-hours trading. Through Wednesday's close, the stock has fallen 23% this year.

The same-store sales gain, which matched analysts' expectations and the previous quarter's clip, was down from a 4% rate a year earlier. Still, it comes as many retailers report sliding sales that are largely the result of lower traffic as more shoppers move online, especially to Amazon.com, and as fast-fashion chains like Hennes & Mauritz AB gab market share. Retail giant Macy's last week said it would shut another 100 stores, shrinking its physical footprint by 15% as same-store sales fell 2%. Earlier Wednesday, Target Corp. said sales at existing stores fell for the first time in more than two years and warned of further weakness.

The improvement in L Brands' core lingerie business comes after the company in May cautioned that demand there was soft. L Brands' longtime chief executive, Leslie Wexner, took over the segment in February and has been trying to scale back promotions and narrow merchandise offerings. The June report is a sign Mr. Wexner's efforts are taking hold. Comparable sales at Victoria's Secret rose 2%, up from a 1% rise in the first quarter.

In all, L Brands reported a profit of $252.4 million, or 87 cents a share, up from $202.5 million, or 68 cents a share, a year earlier. The latest quarter's result includes a gain of 24 cents a share that stems from a cash distribution.

Revenue increased to $2.89 billion from $2.77 billion. Analysts predicted an adjusted 59 cents on $2.86 billion, according to Thomson Reuters.

Following the better-than-expected results, L Brands pushed up its guidance for the year. The company now sees $3.70 to $3.85 in adjusted earnings per share, up from an earlier range to $3.60 to $3.80 and versus the $3.73 analysts have anticipated.

For the current quarter, thought, L Brands gave an outlook that fell short of expectations. The company predicted 40 cents to 45 cents in adjusted per-share profit, shy of the 47 cents analysts have expected.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

August 17, 2016 18:05 ET (22:05 GMT)

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