L Brands profit falls 50% in first quarter 2018

L Brands begins fiscal 2018 with a bittersweet flavor. The US group, one of the largest fashion retailers in the world and owner of Victoria’s Secret, has ended the first quarter with profits plummeting 49.5% year-on-year. Company sales, however, have gained traction again, with a 7% upsurge.

The company’s net income stood at 45.5 million dollars (40 million euros) in the first quarter of 2018, compared to 94.05 million dollars (80.2 million euros) in the same period of the previous year. The result was slightly below Wall Street estimates forecast, and L Brands’ stock fell 6.2% after the market closed yesterday in the United States.

Between February and April, L Brands registered revenues of 2,625 million dollars (2,239 million euros). Sales at Victoria’s Secret, which remains the group’s key retail chain by turnover, grew 2.3% during the period.

L Brands continued reducing its distribution network with twenty store closures in the first quarter

Like-for-like sales at the lingerie brand increased 1% in the first quarter, while Bath&Body Works grew by 8%. However, taking into account only same-store sales (without wholesale) Victoria’s Secret shrunk 5%, while revenues at Bath&Body Works went up 5%.

During the first quarter, L Brands closed five Victoria’s Secret stores and one Pink location in Canada. The group also shutted down eleven Bath&Body Works stores in the United States and one of Henri Bendel. In parallel, a new store of Victoria’s Secret and thirteen of personal care chain were opened, all of them in their local market. Overall, L Brands counted to May 5 with 3,075 stores, compared to 3,069 a year ago.