Victoria's Secret owner L Brands booked a surprise profit and better-than expected revenue during the latest quarter, sending its shares higher in after-hours trading Wednesday.
Sales fell 20% during the fiscal second quarter ended Aug. 1 with stores closed due to the pandemic, but they weren't as bad as analysts feared thanks to its soaps and fragrances division.
The news sent the company's shares up by more than 4% in after-hours trading after closing the day up by about 1%.
Excluding one-time charges, it earned 25 cents per share, up a penny compared with a year ago and better than the 42 cent loss expected by analysts.
L Brands generated $2.32 billion in revenue, down from $2.9 billion during the same time last year but better than an expected $2.21 billion, according to data from Refinitiv.
On an unadjusted basis, it swung to a net loss of $49.6 million, or 18 cents per share, during the quarter, compared with a profit of $37.6 million, or 14 cents a share, a year ago.
At its Bath & Body Works brand, sales surged 13% in the U.S. and Canada to $1.2 billion, with consumers stocking up on hand sanitizers and scented soaps to keep clean during the coronavirus crisis.
Within its Victoria's Secret lingerie division, sales fell 39% in the U.S. and Canada to $977.5 million.
Same-store sales for Bath & Body Works climbed an eye-popping 123%, while they were up 28% at Victoria's Secret. Overall, same-store sales jumped 63%, way above expectations of an 18% decline.
The company said it is not offering an outlook for the remainder of the year due to the uncertainty around the Covid-19 crisis.
However, it did caution it could face some bumps in the road, especially during the all-important holiday shopping season.
"As you know, the majority of our sales and profits for the year occur in the fourth quarter," management said in transcribed commentary. "Given the traffic constraints imposed by social distancing protocols in stores and capacity restraints in our direct channel distribution centers, we have a very cautious outlook about our ability to manage our typical holiday volumes, which are about three times larger per week than the average week in the second quarter historically."
The company said it is testing ways to spread out its typical holiday sales "over a broader time period, and to pull some volume out of the fourth quarter and into the third."
L Brands is still planning to separate its Bath & Body Works business from Victoria's Secret.
Last month, the company announced it would be slashing about 15% of its corporate workforce, eliminating roughly 850 jobs, as part of its efforts to cut expenses by about $400 million annually.
L Brands ended the second quarter with $2.6 billion in cash on its balance sheet
L Brands' stock is up by about 57% this year. The company has a market cap of $7.9 billion.
Correction: This article was updated to correct Victoria's Secret's same-store sales growth. Sales were up by 28%.