L Brands comps continue to fall in November, stock gains

US fashion and lifestyle retail group L Brands announced on Thursday a drop in comparable sales for November, once again hurt by its Victoria Secret lingerie business, who has more recently exited from swimwear.


Victoria's Secret

The Columbus, Ohio-based company said comparable sales decreased 1 percent for the four weeks ended November 25, on fewer discounts and promotional activities.

The drop was met by a 2 percent increase in net sales for the the month, where revenues reached $1.267 billion, compared to net sales of $1.246 billion last November, according to a company press release.

By brand category, Victoria's Secret suffered a 6 percent same-store drop for the month, offset by the group's home and beauty brand Bath & Body Works, up 6 percent for the month. 

For the 43 weeks ending November 25, L Brands -- which also operates Pink, La Senza and Henri Bendel -- reported a 6 percent plunge in comparable store sales. Group net sales for the same period totalled $9.077 billion, a decrease of 3 percent compared to net sales of $9.331 billion in November 2016. 

In a conference call, L Brands management hailed the group's improvement in merchandise margins, thanks to a decrease in promotional activities.

“The merchandise margin rate was up significantly, driven by the reduction in promotional activity. Margin dollars were about flat to last year and in line with expectations," said Amie Preston, chief investor relations officer.

“Thanksgiving weekend results met our expectations with total sales from Thursday through Monday up in the low single-digit range," she added. The results of the holiday weekend trade will make up December's comps announcement.

After the announcement on Thursday, shares of the company rose 6.7 percent to $56.05.

To date since January, L Brands has closed nine Victoria's Secret stores in the US, compared to 14 Bath & Body Works.

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