L Brands’ monthly sales exceed expectations

L Brands had a roaring start to the year, reporting January numbers that were far better than Wall Street expectations.

The Columbus-based retailer reported that comparable-store sales, a key indicator of a retailer’s health, increased by 7 percent, well ahead of analyst predictions of a 1.8 percent rise. Overall, sales for the five-week period rose to $1.04 billion, up from $805.2 million for the four-week period last year. January’s extra week this year represented approximately $150 million in sales.

The report was a surprise to analysts.

“L Brands turned in its strongest performance in 25 months dating back to December 2015,” said Ken Perkins, president of research firm Retail Metrics.

“Our store checks have been mixed throughout the month,” Perkins said. “January started off well with consumers utilizing gift cards and exchanging holiday gifts, but bittercold temps in the East and South inhibited traffic. Martin Luther King weekend promotions generated a modest traffic bump, but the back half of January (was) relatively sluggish.”

By brand, Victoria’s Secret reported comparable-store sales for the month rose by 4 percent, well ahead of the 1.9 increase expected by Wall Street. The lingerie brand saw growing sales in lingerie, the Pink chain and beauty items.

At Bath & Body Works, comparable-store sales increased by 13 percent, far better than the 1.3 percent rise expected. Sales were driven by the chain’s semiannual sales.

Profit margins in January for the entire company were down compared with last year, said Amie Preston, chief investor relations officer.

However, “our merchandise margin rates were positively impacted by the extra week of full-priced selling,” she said.

For the fourth quarter, L Brands has updated its predictions for earnings, raising them to $2.05 per share, up from the retailer’s previous guidance of $2 per share. For the full year, sales are expected to be $12.63 billion, up from $12.57 billion for the previous year.

L Brands will report fourth-quarter earnings and a full-year report on Feb. 28.