L Brands, Inc. reported first quarter 2021 earnings results.
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The company reported earnings per share of US$0.97 for the first quarter ended 1st May, 2021 compared to a loss per share of US$1.07 for the first quarter ended 2nd May, 2020. First quarter operating income was US$572.1 million compared to a loss of US$317.7 million last year, and net income was US$276.6 million compared to a loss of $296.9 million last year.
In 2021, a $US105.5 million (US$0.28 per share) pre-tax charge on the early extinguishment of debt. In 2020, net charges of US$0.08 per share. US$96.8 million (US$0.26 per share) non-cash pre-tax impairment charges related to certain Victoria’s Secret store assets, and a tax benefit of approximately US$50.4 million (US$0.18 per share), related to the favorable resolution of certain tax matters.
Excluding the above items, adjusted first quarter 2021 earnings per share were US$1.25 compared to an adjusted loss per share of US$0.99 last year, operating income was US$572.1 million compared to an adjusted loss of US$220.9 million last year, and adjusted net income was US$356.7 million compared to an adjusted net loss of US$275.2 million last year.
Andrew Meslow, CEO of L Brands, commented, “L Brands delivered record first quarter earnings, driven by continued strength and exceptional performance at Bath & Body Works and Victoria’s Secret. We are pleased that the momentum in both businesses has continued, driven by positive customer responses to our assortments, which allowed us to reduce promotional activity and deliver substantial increases in our merchandise margin rates. We’d like to express our appreciation to our associates and partners who have made these record results possible. Grounded in the strength of the two businesses, we look forward with confidence to the separation of Bath & Body Works and Victoria’s Secret into two industry-leading, publicly traded companies.”
Meslow continued, “We are also pleased to continue the company’s long-standing history of giving back to our communities through a $35 million contribution in the first quarter, split between the L Brands Foundation, and two new foundations for the separate Bath & Body Works and Victoria’s Secret businesses. Since the establishment of the L Brands Foundation in 1993, we have donated more than $300 million to support thousands of organizations with a focus on health and empowerment of women, nurturing and mentoring children, improving education and enriching the cultural arts. Embedded in our focus is a commitment to diversity, equity and inclusion. As we separate Bath & Body Works and Victoria’s Secret, each business is committed to continuing to make a positive difference in the world and our communities.”
The company reported net sales of US$3.024 billion for the first quarter ended 1st May, 2021, compared to net sales of US$1.654 billion for the first quarter ended 2nd May, 2020. First quarter 2020 sales were negatively impacted by the closure of stores for approximately half the quarter due to the COVID-19 pandemic. First quarter 2021 sales increased 15 percent compared to sales of US$2.629 billion in the first quarter of 2019.
Bath & Body Works net sales were US$1.469 billion for the first quarter ended 1st May, 2021, compared to net sales of US$760.6 million for the first quarter ended 2nd May, 2020. First quarter 2021 sales increased 60 percent compared to the first quarter of 2019. First quarter 2021 U.S. and Canada store sales increased 47 percent to US$1.050 billion compared to US$714.3 million in 2019. First quarter 2021 sales in the direct channel were US$349.2 million, an increase of 21 percent compared to 2020 and a 123 percent increase compared to 2019.
Victoria’s Secret total comparable sales for the first quarter ended 1st May, 2021 increased 9 percent compared to the first quarter of 2019. Comparable U.S. and Canada store sales for the first quarter of 2021 decreased 3% compared to the first quarter of 2019. First quarter 2021 sales of US$1.554 billion decreased 7 percent compared to the first quarter of 2019 and reflect the net closure of 233 company-operated stores since the first quarter of 2019. First quarter 2021 sales in the direct channel were US$520.9 million, an increase of 69 percent compared to 2020 and a 44 percent increase compared to 2019.
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The company is forecasting second quarter earnings per share between US$0.80 and US$1.00, which excludes one-time costs related to the spin-off of Victoria’s Secret, compared to adjusted earnings per share of US$0.25 in 2020 and US$0.24 in 2019. Due to the continued uncertainty in the environment, as well as the impending separation of the Bath & Body Works and Victoria’s Secret businesses targeted to occur in August 2021, the company is not providing earnings guidance for the full year 2021.