L Manufacturers shares surged 6% on Thursday as the corporate reported strong vacation comparable gross sales amid a difficult retail atmosphere and supplied a better-than-expected revenue outlook for the fourth quarter.
Comparable gross sales within the vacation interval (9 weeks ended Jan. 2, 2021) rose 5% year-over-year pushed by the energy in L Manufacturers’ (LB) Tub & Physique Works enterprise at the same time as weak spot in Victoria’s Secret banner continued to persist. Total, internet gross sales within the vacation interval declined 1.8% to $3.84 billion year-on-year.
Comparable gross sales of Tub & Physique Works, which incorporates soaps, sanitizers and different physique care merchandise, spiked 17% within the vacation interval pushed by a 5% rise in retailer comparable gross sales and a 64% soar in its direct channel gross sales. In the meantime, comparable gross sales of Victoria’s Secret lingerie model fell 9% as a 24% rise in direct channel comparable gross sales was not sufficient to offset the 23% hunch in gross sales from bodily shops.
The corporate acknowledged that the merchandise margin of each Tub & Physique Works and Victoria’s Secret expanded considerably within the quarter-to-date interval. (See LB stock analysis on TipRanks)
Commenting on the vacation season efficiency, CEO Andrew Meslow acknowledged “Tub & Physique Works continues to ship document outcomes, demonstrating the energy of the model. The turnaround at Victoria’s Secret additionally continues to achieve momentum, pushed by an improved merchandise assortment and centered execution of retail fundamentals and our revenue enchancment plan.”
Wanting forward, L Manufacturers expects fiscal fourth-quarter EPS to be within the vary of $2.70-$2.80, which is above analysts’ estimates of $1.96. The corporate is scheduled to announce its fourth quarter outcomes on February 24.
Following the monetary outcomes, Guggenheim analyst Robert Drbul raised his income, gross margin and earnings estimates for the fiscal fourth quarter and full-year. Nonetheless, the analyst reiterated a Maintain ranking on L Manufacturers as he believes that the “challenges going through the corporate at this time are appropriately mirrored within the shares, with retailer closures and difficult mall visitors creating an unsure earnings trajectory, in our view; that is balanced by sturdy efficiency at BBW [Bath & Body Works] and a few enchancment at VS [Victoria’s Secret].”
The remainder of the Avenue has a cautiously optimistic outlook on the inventory. The Reasonable Purchase analyst consensus breaks down into 9 Buys, 6 Holds and a couple of Sells. With shares rising a whopping 156% over the previous 12 months, the common price target of $43.71 signifies a draw back potential of 5.3% within the 12 months forward.
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