LB LandBridge Company LLC

By Chelsey Dulaney 

L Brands Inc. on Thursday raised its profit outlook for the recently ended fourth quarter, though the parent of retailers such as Victoria's Secret reported a surprise decline in a key sales metric in January.

Shares fell 5.3% to $90.10 a share in late morning trading.

L Brands, which also owns mall stalwart Bath & Body Works, said it now expects earnings of $2.05 a share, above its earlier guidance for earnings of $1.85 to $1.95. That would also top the $2 a share analysts polled by Thomson Reuters are forecasting for the quarter.

L Brands also said it has boosted its annual dividend by 20% to $2.40 and announced a $2 special dividend, payable March 4. The company added that it has authorized a $500 million share-buyback program.

But the company said comparable sales, which exclude newly opened and closed stores, fell 2% in January, while analysts had expected a 2.4% increase, according to Consensus Metrix. L Brands cited the shift of the Victoria's Secret semiannual sale into December for the decline.

Excluding the impact of that shift, L Brands said comparable sales would have been up 1%.

Victoria's Secret sales fell 4% in January, due to the semiannual sale shift and a decline in the beauty business, while analysts had expected 3.3% growth. Bath & Body Works sales were up 2%, better than the 1.1% growth analysts had forecast.

L Brands said its merchandise margin rate declined compared with the prior year due to a sports event and foreign-exchange impacts from its Canadian business.

Despite the softer-than-expected month, L Brands reported overall sales for the fourth quarter, which ended Jan. 30, that topped expectations. L Brands said net sales rose to $4.4 billion from $4.07 billion a year earlier. Analysts had forecast $4.37 billion in sales.

Comparable sales rose 6% for the period.

L Brands had a strong showing during the holiday selling season, including what it described as its "best December ever," as consumers didn't pull back as much as feared. Still, foot traffic to stores fell across the retail industry as shopping continues to shift online. L Brands will report its fourth-quarter earnings and give guidance for 2016 on Feb. 25. Meanwhile, L Brands said it expects 2016 profit to be hurt by $1 billion in debt issuance last year and pressure from foreign exchange.

Looking to February, L Brands said it expects its comparable sales to be up in the low-single digits.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

(END) Dow Jones Newswires

February 04, 2016 11:58 ET (16:58 GMT)

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