Sales Flat at L Brands

Warm weather drove summer clearance sales last month, helping many national retailers to post strong sales gains even as Columbus-based L Brands suffered a rare June swoon.
L Brands (the temporary name for Limited Brands) reported flat comparable-store sales, falling short of Wall Street expectations for the second time in the past three months. But traders shrugged off the news and sent shares up by 3.4 percent to close at $52.33.
The flat sales at L Brands were unusual not only for the company but among national retailers, as some companies reported their strongest sales gains since January.
According to a preliminary tally of 12 retailers by the International Council of Shopping Centers, revenue at stores opened at least a year — an industry measure of a store’s health — rose 3.9 percent in June from the same month a year ago. The mall trade group had expected an increase of 3 to 3.5 percent.
The overall good retail news was due to “an improving labor market coupled with falling gas prices during the month, seasonably warmer temperatures that drove summer clearance, rising home prices and generally better macroeconomic conditions,” said Ken Perkins, president of RetailMetrics, a research firm. “Second-quarter same-store sales expectations have also been ticking up of late.”
Among the retailers that topped Wall Street expectations were Stein Mart, which posted a 6.5 percent comparable-store sales increase, above analysts’ predictions of a 4 percent rise; and Costco, which saw a 6 percent rise, better than the expected 5.4 percent increase.
The data, released yesterday, offer positive signs for the back-to-school season, which is the second-biggest shopping period behind the winter holidays. June is when stores clear out summer merchandise to make room for goods for fall, so brisk sales mean that stores likely won’t be stuck with summer clothing that they need to get rid of.
“The reports are encouraging,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers. “We had seen consumers pull back a little earlier this year, but now there’s a willingness to spend. It adds to the flavor of the other economic data out there that looks better.”
L Brands did see sales rise to $1.101 billion in June, up from $1.077 billion during the same month last year. In addition, profit margins on merchandise were up, “above our expectations,” said Amie Preston, chief investor relations officer.
L Brands’ disappointing comparable-store sales were primarily due to a 1 percent decrease at the company’s Victoria’s Secret stores, and a 9 percent drop in sales at Victoria’s Secret Direct, the chain’s online and catalog business.
L Brands officials blamed the decreases on lower clearance sales caused by a shift in the timing of the semi-annual sale.
Comparable-store sales were flat at the company’s Canadian lingerie chain, La Senza.
Only the company’s personal care and home-fragrance chain, Bath & Body Works, saw comparable-store sales grow, by 2 percent. The increase was driven by sales in the signature collection, home fragrance and soap and sanitizer, Preston said.
L Brands officials were cautiously optimistic about July sales, predicting low single-digit gains for comparable-store sales.
For the year to date, L Brands reported sales of $4.1 billion, an increase from $3.9 billion for the same time last year, and a comparable-store sales increase of 2 percent for the year to date.