L Brands shares skyrocketed Thursday as a coronavirus-fueled sales surge at Bath & Body Works helped the retailer post a blowout quarterly profit. The Ohio-based conglomerate’s stock price
L Brands shares skyrocketed Thursday as a coronavirus-fueled sales surge at Bath & Body Works helped the retailer post a blowout quarterly profit.
The Ohio-based conglomerate’s stock price climbed nearly 19 percent to $39.95 in early trading after it smashed Wall Street’s expectations for the August-to-October quarter, largely thanks to increased demand for Bath & Body Works’ scented soaps and hand sanitizers.
The cosmetics chain’s third-quarter sales exploded by 55 percent to a record $1.7 billion, with a third of that growth coming from the soaps and sanitizers category. L Brands reported a net profit of roughly $331 million, or $1.17 per share, on Wednesday as a result, blowing past analysts’ estimates of about 20 cents a share, according to Bloomberg data.
Bath & Body Works’ strong performance offset another tough quarter for Victoria’s Secret, the struggling lingerie business that L Brands unsuccessfully tried to sell earlier this year.
The underwear chain’s total sales dropped about 14 percent from the year-earlier quarter to $1.3 billion. L Brands said the business nevertheless saw a “significant improvement” with bright spots such as the sleepwear and lounge categories, which got a boost from customers “nesting” at home.
But CEO Andrew Meslow cautioned investors that that the company may not be able to match its performance from last year’s holiday season because of ongoing pressures from the COVID-19 pandemic, including constraints on store traffic and online fulfillment capacity.
“We are confident in the strength of our brands and remain focused on execution and delivering the best possible outcome for the fourth quarter,” Meslow said in a statement.
The results came about six months after L Brands scrapped its deal to sell Victoria’s Secret to private-equity firm Sycamore Partners after the pandemic shuttered its stores. L Brands subsequently announced plans to permanently close about 250 of the chain’s stores in the US and Canada.