What Are Major Revenue Sources For L Brands?

September 25th, 2018 by Trefis Team
LB: La Barge logo
LB
La Barge

L Brands’ (NYSE: LB) key sources of revenues are Victoria Secret, Bath & Body Works, and the International Sales of which the Victoria Secret segment alone is responsible for more than 60% of the company’s revenues. Below we discuss the company’s key revenue sources and its expected 2018 performance using an interactive dashboard What Are L Brands Key Sources of Revenues. You can modify our forecasts for the company’s revenues and key drivers to see how changes would impact its earnings.

LB’s Victoria Secret segment (~60%) contributes to the major chunk of its revenue. For the Q2 of 2018, net sales increased $79 million to $1.725 billion primarily due to increases in beauty, sleep, and panties, driven by the merchandise assortment, and in constructed bras as they continue to focus on that core business, whereas comparable store sales decreased 5%.  The company is making attempts to improve their understanding of customers’ demands in order to make the products more relevant and relatable to them. The company has also focused on more efficient teams, strengthening its core bra business with new innovation in line with fashion trends, and focusing on the holiday season during the end of the year.

The Bath & Body Works (~32%) sales increased $104 million to $964 million y-o-y, whereas the comparable store sales increased 7%. This increase was mostly in categories including home fragrance, body care and soaps and sanitizers, which incorporated newness, innovation, and fashion.

Victoria’s Secret and Bath & Body Works International sales (~5%) increased $31 million to $145 million primarily related to new company-owned Victoria’s Secret stores, direct channel growth in Greater China, and additional stores opened by their partners. These increases were partially offset by a decline in Victoria’s Secret U.K. sales. The others segment including sales for the brands Mast Global, La Senza, and Henri Bendel also went up by single digits.
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During the recent Q2 earnings, the company’s total Net sales rose to $2.98 billion, compared with $2.76 billion a year ago, up 7% from the prior-year quarter, with adjusted earnings per share at $0.36, driven by growth across its Bath and Body Works segment, a well-positioned customer strategy, international diversification, and rising online sales. Looking ahead for Q3 and beyond, the company continues to focus on improving the customer experience in stores and online and improving assortments in compelling new product launches. They see a lot of opportunity in Asia geographies, where they will continue to allocate capital and  plan to continue growing sales while also expanding margins. The company updated its guidance for 2018 full-year earnings per share to $2.45 to $2.70 from $2.70 to $3.00.

 

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