L Brands revises FY13 earning expectations upward

ANALYSIS_ L Brands, formerly Limited Brands, beats earnings expectations by 1 cent per share and revenue by 10 million dollars. For the full year, the company revised its expectations upward to between 3.06 and 3.21 dollars per share from

its previous prediction of 2.95 to 3.15 dollars per share.

Stuart B. Burgdoerfer, Chief Financial Officer, Principal Accounting Officer and Executive Vice President at L Brands explained that “second quarter comp increase of 2 percent was in line with our guidance, and we are pleased that we were able to deliver earnings upside through disciplined management and execution in the business, which resulted in better-than-expected results in expenses and merchandise margin. Second quarter earnings per share increased 22 percent to 0.61 dollars, 0.06 dollars above the high end of our guidance. Total sales increased 5 percent to 2.516 billion dollars, and comps increased 2 percent on top of an 8 percent increase last year.”

Gross margin however declined by 10 basis points, “as buying and occupancy expense is increasing as we invest in real estate expansion for Victoria's Secret and international. These investments continue to deliver very strong returns,” stressed Burgdoerfer in a call with analysts Friday.

Operating income dollars increased by 16 percent, driven by improvements in all 3 segments, and the rate increased by 130 basis points. “We expect inventories to continue to build through the third quarter to support significant planned launches in both Victoria's Secret and Bath & Body Works,” said the company on Friday.

The retail group is also making targeted investments to support in-stock levels at Victoria's Secret. Inventory at the end of the third quarter is expected to be up in the high single-digit range.

L Brands gathers market support amidst retailers’ gloom

L Brands (NYSE:LTD) last released its earnings data on Wednesday, August 21st. The company reported 0.61 dollars earnings per share (EPS) for the quarter, beating the consensus estimate of 0.60 dollars by 0.01 dollars.

Shares of L Brands (NYSE:LTD) opened at 58.60 on Friday. L Brands has a 52 week low of 42.49 dollars and a 52 week high of 61.36 dollars, what gives the company a current market cap of 16.958 billion dollars and a P/E ratio of 22.42.

The company reported revenue up to 2.52 billion for the quarter, slightly ahead the consensus estimate of 2.51 billion dollars and compared to last year’s comparable period, when the company posted 0.50 dollars earnings per share.

On the back of the news, BMO Capital Markets analysts raised the price target and earnings estimates on L Brands Inc (LTD) on Friday due to the company’s new guidance. However, the analysts still rate the stock as “Market Perform.” The analysts now see shares of LTD reaching 52 dollars, which suggests an 11 percent downside to the stock’s Thursday closing price of 58.60 dollars, reported ‘Seeking Alpha’.