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Victoria's Secret Parent Posts Q4 Earnings Beat, Stock Tanks 12% on Weak Guidance

Madeleine Johnson

L Brands Inc. LB just released its fourth quarter fiscal 2016 earnings results, posting earnings, before non-recurring items, of $2.03 per share and revenues of $4.49 billion. Currently, LB is a #5 (Strong Sell) on the Zacks Rank, and is down 12% to $51.07 per share in trading shortly after its earnings report was released.

Beat earnings estimates. The company reported earnings of $2.03 per share, easily beating the Zacks Consensus estimate of $1.90 per share. This number excludes 14 cents from non-recurring items.

Matched revenue estimates. The company saw revenues of $4.49 billion, matching our consensus estimate of $4.497 billion and increasing 2% year-over-year.

Comparable sales for Q4 were flat. The exit of the swim and apparel categories had a negative impact of 2 percentage points and 4 percentage points to total company and Victoria’s Secret comparable sales, respectively.

Looking ahead, L Brands expects full year fiscal 2017 earnings per share to be between $3.05 and $3.35 and 20 cents to 25 cents per share in Q1. The retailer expects to report a mid-to-high-teens decrease in February comparable sales, below expectations for a mid-single digit decrease and reflecting a decline of about 20% at Victoria’s Secret and a mid-single digit decline at Bath & Body Works.

Here’s a graph that looks at L Brands’ price, consensus, and EPS surprise:

L Brands, Inc. Price, Consensus and EPS Surprise

L Brands, Inc. Price, Consensus and EPS Surprise | L Brands, Inc. Quote

L Brands operates as a retailer of women's intimate and other apparel, beauty and personal care products and accessories primarily in the United States. Its brand includes Victoria's Secret, Victoria's Secret Pink, Bath & Body Works, La Senza and Henri Bendel. The company sells its product through franchise, license, wholesale partners, websites, catalogue, and other channels. L Brands Inc., formerly known as Limited Brands Inc., is headquartered in Columbus, Ohio.

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