L Brands, the parent company of Victoria Secret, plunges 37%

On Wednesday, L Brands (LB) reported its third straight quarterly loss and fourth consecutive drop in sales, with its net sales decreased by 37% to $1.65 and stores shut, as a result of the coronavirus pandemic.

In its fiscal first quarter, the company’s adjusted earnings per share was at a loss of 99 cents on revenue of $1.65 billion.

L Brands also reported a net loss of $296. 9 million, or $1,07 per share, compared to a profit of $40.3 million or 14 cents a share, a year ago. In all, L Brand’s net sales dropped 37% to $1.65 billion from $2.63 billion a year ago.

At the end of the firs-quarter, L Brands said it has $957 million in cash on hand, with a market cap of roughly $3.4 billion.

However, the retailer’s same-store sales rose 4%, surging 41% at Bath & Body Works and dropping 13% at Victoria’s Secret.

Victoria’s Secret’s total sales plunged 46% to $821.5 million. While total sales at Bath & Body Works fell 18% to $712.7 million, although its online business rose 85% with massive orders for hand sanitizers and scented soaps, according to the company.

According to Refinitv's estimates, analysts expected L Brands to report an adjusted loss of 72 cents per share on revenue of $1,72 billion. While analysts may have their own estimates, the impact of the coronavirus pandemic on global economies has made it difficult for analysts to assess earnings.

In a separate securities filing on Wednesday, the company announced that its current COO Charles McGuigan will step down. The company has also named its current CFO Stuart Burgdoerfer as interim CEO of Victoria’s Secret.

The company also announced that it is still committed to making Bath & Body Works a “pure-play public company” while Victoria’s Secret operates as a standalone business.

The company said it has plans to shut down about 250 of Victoria’s Secret and PINK stores across North America before the year runs out.

L Brand also announced an agreement it struck with Sycamore Partners to terminate Victoria’s Secret deal, om May 4. Before the deal termination agreement, Sycamore had agreed to acquire 55% shares in Victoria’s Secret for $525 million, causing the lingerie brand to go private.

Due to the coronavirus pandemic and forced shut down of Victoria’s Secret stores and accumulating missed rent payments, Sycamore made efforts to end the deal in April. It wasn’t until early this month that L Brands agreed to the termination deal to avoid “costly and distracting litigation to force a partnership with Sycamore.”

L Brands held a call with analysts on Thursday at 9.am ET to discuss its first-quarter reports, However, the company has said that it does not intend to provide a second-quarter or full-year outlook any time soon due to the uncertainties surrounding the Covid-19 pandemic. However, it anticipates that the majority of its stores will reopen by the end of July.