L Brands, the parent company of Victoria’s Secret, surpassed expectations with its first-quarter earnings report for 2021. The company reported a net income of $276.6 million, or $0.97 per share, which was a significant improvement compared to the loss of $296.9 million, or $1.07 per share, in the same period last year. Adjusted earnings per share came in at $1.25, surpassing analysts’ estimates of $1.25.

One of the primary factors contributing to L Brands’ strong performance in the first quarter was the substantial increase in net sales. The company’s quarterly net sales reached $3.02 billion, marking an impressive 82.8% growth from $1.65 billion in the previous year. This growth can be attributed to the company’s successful rebound from the negative impact of store closures during the Covid-19 pandemic. Comparing the first quarter of 2021 to the same period in 2019, L Brands’ sales rose by 15%.

Victoria’s Secret, a prominent brand within L Brands’ portfolio, reported net sales of $1.55 billion, a 73.9% increase from $893.6 billion in 2019. However, the brand experienced a 7.0% decline compared to the first quarter of 2019, which can be attributed to the closure of 233 stores over the past two years. Despite this, Victoria’s Secret Direct sales saw a significant increase of 69.4% to $520.9 million in the first quarter of 2021. The brand’s comparable sales, excluding revenue from temporarily closed stores, rose by 25% year over year and 9% compared to 2019.

Bath & Body Works, another brand under L Brands, also reported strong growth in the first quarter. The brand’s quarterly net sales reached $1.47 billion, a remarkable increase of 93.2% from the previous year. Additionally, Bath & Body Works’ comparable sales rose by 16% compared to 2020. L Brands CEO Andrew Meslow expressed satisfaction with the company’s performance, attributing it to positive customer responses to their product assortments. The solid sales allowed the company to reduce promotional activity and improve merchandise margin rates.

Looking ahead, L Brands is preparing for the spin-off of Victoria’s Secret into a separate company by August of this year. The decision to separate the two brands aims to allow each company to focus on their respective strategic priorities. Bath & Body Works, which has consistently outperformed Victoria’s Secret, will have the opportunity to pursue its growth plans in North America and Europe. Meanwhile, Victoria’s Secret will work towards revitalizing its business by aligning itself with evolving industry trends that emphasize comfort and inclusivity.

L Brands has not provided full-year financial guidance for fiscal 2021 due to the ongoing uncertainty of the Covid-19 pandemic and the upcoming separation of Victoria’s Secret. However, for the second quarter, the company expects earnings per share to range between $0.80 and $1.00, excluding one-time costs associated with the spin-off.

Useful links:
1. L Brands Official Website
2. The Economist – Business & Finance Section