(Filed Under Financial and General Interest News). Comparable store gains of 10% at Victoria’s Secret stores this October over the same month last year led to company-wide sales gains for its parent, L Brands, Inc. (formerly known as Limited Brands).
L, which also owns the La Senza stores in Canada and the Bath & Body Works, had “net sales of $680.5 million for the four weeks ended Nov. 2, 2013, compared to net sales of $611.0 million for the four weeks ended Oct. 27, 2012.” In addition, comparable sales for all of its stores registered an “increase of 8 percent for the four weeks ended Nov. 2, 2013, compared to the four weeks ended Nov. 3, 2012.”
For the 13 weeks ended Nov. 2, 2013 the company reported “an increase of 6 percent compared to net sales of $2.050 billion for the 13 weeks ended Oct. 27, 2012. The company reported a comparable store sales increase of 3 percent for the 13 weeks ended Nov. 2, 2013, compared to the 13 weeks ended Nov. 3, 2012. And for the 39 weeks ended November 2nd, L registered net sales of $6.955 billion, “an increase of 5 percent compared to net sales of $6.603 billion for the 39 weeks ended Oct. 27, 2012. The company reported a comparable store sales increase of 3 percent for the 39 weeks ended Nov. 2, 2013, compared to the 39 weeks ended Nov. 3, 2012.”
As a result of these gain, L said it “expects to report third quarter earnings per share at the high end of its previous guidance of $0.23 to $0.28. The company will report third quarter earnings on Nov. 20 after the close of the market and will conduct its third quarter earnings call at 9 a.m. Eastern on Nov. 21.”
In comment explaining the results, Amie Preston, chief investor relations officer noted that “the merchandise margin rate was down to last year,” and that “inventories ended the month up 8% per square foot at cost.” However, she reminded that the company’s “inventory reflects additional investment to support significant product launches at Victoria’s Secret, including discontinued Body by Victoria products that will be cleared in the January semi-annual sale.”
Preston said the dramatic comp stores sales increase at Victoria’s Secret was “driven by strength in lingerie, Pink and beauty. October began with a focus on our Body by Victoria collection paired with our Victoria fragrance. Additionally, the month featured the Victoria’s Secret Sport Collection and Pink’s push-up bra. We ended the month with a focus on our Very Sexy collection and the launch of Very Sexy Night fragrance.”
Preston added that “the merchandise margin rate was down significantly to last year, driven by strong response to increased promotional activity. Merchandise margin collars increase versus last year.”
“Third quarter sales increased 5% to $1.059 billion and comps increased 4%.”
Looking to November activity, Preston said “we will begin November with a continued focus on our Very Sexy collection. Toward the end of the month, the focus will be on our holiday assortments.”
The investor relations officer explained that sales declined at both Victoria’s Secret direct and La Senza. “At Victoria’s Secret direct, October sales were down 7%, as declines in apparel and shoes offset strength in bras, panties, sleep and sport. The merchandise market rate was down significantly to last year, driven by increase promotional activity. Third quarter sales decrease 1% to $268.9 million.”
“At La Senza,” Preston continued, “comps were down 2%. The merchandise margin rate was down significantly to last year, driven by increase promotional activity and unfavorable foreign exchange impact. Third quarter sales were $75.1 million and comps increased 3%.”
Preston issued words of caution about November numbers. “As you know, Thanksgiving falls one week later this year. The loss of the post-holiday wee will negatively impact November.. As a result, we are projecting negative low-single digit comps in November. We expect positive low-single digit comps for the fourth quarter.”
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