L Brands Inc. swung to a first-quarter profit and reported sales in line with Wall Street expectations late Wednesday, saying it offered fewer promotions and that profit margins improved.
L Brands (LB) earned $277 million, or 97 cents a share, in the quarter, versus a loss of $297 million, or $1.07 a share, in the year-ago quarter.
Adjusted for one-time items, the retailer earned $1.25 a share, versus an adjusted loss of 99 cents a share a year ago.
Sales rose to $3.02 billion from $1.66 billion a year ago; its stores were closed for about half of the first quarter of 2020 due to COVID-19 shutdowns.
Analysts polled by FactSet expected L Brands to report adjusted earnings of $1.17 a share on sales of $3.02 billion.
"We are pleased that the momentum in both businesses has continued, driven by positive customer responses to our assortments, which allowed us to reduce promotional activity and deliver substantial increases in our merchandise margin rates," Chief Executive Andrew Meslow said in a statement.
"Grounded in the strength of the two businesses, we look forward with confidence to the separation of Bath & Body Works and Victoria's Secret into two industry-leading, publicly traded companies," he said.
L Brands guided for second-quarter per-share earnings between 80 cents and $1, excluding one-time costs related to the spinoff of Victoria's Secret. The company did not provide full-year 2021 guidance given "continued uncertainty" amid the pandemic and the upcoming business separation.
In a separate press release, the retailer said it has appointed chief financial officers for its Bath & Body Works and Victoria's Secret businesses ahead of the spinoffs, and said the previously announced plan to separate Bath & Body Works and Victoria's Secret into standalone, publicly listed companies was on track to be done by August, subject to customary conditions.
L Brands appointed Wendy Arlin, currently its senior vice president of finance, to become Bath & Body Works CFO, and Tim Johnson, previously the CFO and chief administrative officer for Big Lots, will become Victoria's Secret CFO. Current L Brands CFO Stuart Burgdoerfer will retire at that time, as previously announced.
Shares of L Brands fell in the extended session Wednesday after ending the regular trading day down 3.1%. The stock has gained 440% in the past 12 months, compared with an advance of around 41% for the S&P 500 index .
