Victoria’s Secret Owner Boosts Outlook on ‘Unusual’ Demand
(Bloomberg) -- The owner of Victoria’s Secret raised its quarterly profit forecast for the second time this month after seeing an “unusual” shopping surge triggered by the latest round of stimulus checks and relaxing of Covid-19 restrictions.
L Brands Inc., which also owns the Bath & Body Works chain, now expects earnings of 85 cents to $1 a share for the period that runs through April, the company said Friday in a statement. The new forecast, coming just two weeks after L Brands boosted the outlook to as much as 65 cents a share, far outpaces the 52-cent average of analyst estimates compiled by Bloomberg.
It’s an early sign that the stimulus package will have a meaningful impact on the beaten-down retail sector, which has impatiently waited for economic shutdowns to end and struggling consumers to get more cash. The pandemic has had an uneven impact across categories, with clothing sales falling sharply while home goods and grocery demand rose.
“L Brands just laid down the gauntlet on what stimulus can do this early on,” said Simeon Siegel, an analyst at BMO Capital Markets. “The true power of stimulus and the easier comparables of last year’s Covid restrictions are still ahead of us.”
L Brands shares jumped as much as 7.2% to $63.69 Friday in New York, the highest level in more than four years. They had already soared 60% this year through Thursday’s close.
The company isn’t the only one seeing promising signs as stimulus checks roll out and the pandemic eases. Sit-down restaurants are also benefiting, with the largest franchisee of Applebee’s this week citing a surge in demand.
When L Brands, which saw its Victoria’s Secret business crater last year during the pandemic, reported fourth-quarter earnings on March 12, it reinstated its dividend and raised its guidance for this quarter.
The nascent recovery comes as the L Brands enters a new era, with the impending exit of founder Les Wexner from the board of directors. The company plans to split off its lingerie business into a new entity by August, breaking apart the last portions of the Wexner retail empire.
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