L Brands Inc., the owner of Victoria’s Secret, reported higher-than-expected sales in the second quarter, boosted by strength at its Bath & Body Works chain.

Sales were US$2.3 billion in the quarter ended Aug. 1, higher than analysts’ average estimate. The company also reported rising e-commerce sales for Victoria’s Secret and profit that beat expectations.
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Key Insights

• The company isn’t providing guidance for the rest of the year given the widespread uncertainty, but did say that Victoria’s Secret performed better than expected.
• L Brands said it is testing out strategies to spread out spending for the holidays, since health safety measures in will limit capacity in stores. The holiday rush accounts for the majority of the the company’s annual sales and profits, it said in a presentation.
• Still, the Columbus, Ohio-based company sees “meaningful expense pressure” from increased stores costs such as payroll and supplies for the rest of the year. The company cited “the new labor model imposed by social distancing protocols” and wage inflation in the U.S. supply chain and higher costs related to e-commerce and shipping.

Market Reaction

The shares were up 1.2 per cent to US$28.80 in volatile late trading at 4:59 p.m. in New York. The stock had risen 57 per cent this year through Wednesday’s close.