Victoria’s Secret parent L Brands jumps on revised guidance as latest stimulus boosts sales

Victoria's Secret
  • Shares of L Brands, parent of lingerie retailer Victoria’s Secret, rose by nearly 7% on Friday.
  • The company raised its first-quarter earnings view to $US0.85 ($1)-$US1 ($1) a share from $US0.55 ($1) to $US0.65 ($1) a share.
  • An uptick in sales appears to be driven by stimulus payments and easing COVID-19 restrictions.
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Shares of Victoria’s Secret parent company L Brands climbed Friday after lingerie retailer raised its quarterly earnings outlook, citing stimulus payments to Americans as a pillar of sales support.

L Brands now expects first-quarter earnings of $US0.85 ($1)-$US1 ($1) per share, higher than its previous forecast of $US0.55 ($1)-$US0.65 ($1) per share, excluding any charges related to the early extinguishment of debt. Analysts were looking for earnings of $US0.62 ($1) per share, according to a survey of analysts at Yahoo Finance.

The shares tacked on 6.7% when they hit $US63.40 ($83). This year, the stock has jumped nearly 60% and has risen over the past 12 months from about $US12.50 ($16).

“Improved sales trends,” the company gauged, “are primarily driven by unusual shifts in consumer spending patterns, resulting from government stimulus payments, a relaxation of COVID-19 restrictions and other factors.”

The US government this month began sending out $US1 ($1),400 checks to most Americans to help them deal financially with the COVID-19 health crisis. Meanwhile, more businesses have been reopening services with the vaccination of millions of people in the US against coronavirus. About 14% of the population has been fully vaccinated, according to the Centers for Disease Control and Prevention.

The company said it’s seeing stronger activity at its Victoria’s Secret chain as well as its Bath & Body Works stores.

“The environment remains uncertain, and there is no assurance that these improved trends will continue,” L Brands said.