L Brands will open 17 full assortment Victoria’s Secret stores in 2016

L Brands will open 17 full assortment Victoria’s Secret stores in 2016

Apparel company L Brands, owner of lingerie brands Victoria's Secret and La Senza, has upped its third-quarter earnings guidance and revealed plans to grow its store count globally by 30% in 2016. 

The company now expects third-quarter earnings per share of between $0.51 and $0.53, versus its previous guidance of $0.40 to $0.45 and last year’s result of $0.44.

For the month of October, comparable store sales are expected to be up 5%, including an expected 5% comp at Victoria’s Secret stores. Total sales at Victoria’s Secret Direct, which are not included in comparable store sales, are estimated to be up around 7%.

The projections were made as the company held an investor day this week to update the market on its growth plans. 

L Brands told attendees it plans to open 17 new full assortment Victoria’s Secret stores in 2016, including up to six in the UK, two in Russia, one in Mexico, one in Singapore, two in China, and the remainder in the Middle East/Turkey. 

This will represent an increase of around 30% on 2015. Store count is expected to total 539 by the end of 2015, representing an estimated US$400m in sales.

“Management was very confident in continued growth in the business coming from core merchandising activity, a store selling initiative, online growth, and international growth,” said FBR & Co analyst Susan Anderson.

“L Brands continues to be very focused on speed (lead times on average reduced by 50% with further opportunities) to drive sales growth and lower markdowns. We like L Brand's execution, resilient businesses, focus on inventory management/speed, and growth potential.”

Stifel analyst, Richard Jaffe, was equally upbeat adding that L Brand's current momentum is “strong” and its long-term outlook “positive”.

“Despite a challenging environment and difficult comparison, we expect Victoria's Secret and Bath and Bodyworks to be winners this holiday season as the brands’ emotional bond with their customers and their unique and compelling products contribute to strong customer loyalty and help to insulate them somewhat from a competitive external environment. Management’s continued focus on newness and speed should also drive results this holiday.”