L Brands (LB) , the embattled owner of Victoria’s Secret and other retail chains, surged 5.6% Friday to close at $28.97 after announcing plans to close all 23 of its money-losing Henri Bendel stores.
“We have decided to stop operating Bendel to improve company profitability and focus on our larger brands that have greater growth potential,” L Brands’ Chairman and CEO Leslie Wexner said in a statement announcing the plan Thursday after the bell.
Henri Bendel — an upscale women’s fashion retailer that sells handbags, jewelry and other similar items – has stores in 11 states in addition to a flagship location along New York City’s Fifth Avenue. L Brands plans to close the chain in early January after the holiday-shopping season. The company estimates that Henri Bendel will post a roughly $45 million 2018 operating loss excluding charges for the wind-down.
Store closures often cause a retailer’s stock to drop, as they can indicate that a firm is losing to e-commerce giant Amazon (AMZN) . For example, J.C. Penney (JCP) , which has been in store-closure mode for a few years, is down 40.1% this year.
But investors seemed encouraged Friday about L Brands’ announcement even though the company’s other brands — including Victoria’s Secret, Pink and Bath & Body Works — haven’t performed all that well, either. For instance, flagship Victoria’s Secret — one of L Brands’ most-hurting businesses — saw a year-over-year same-store sales fall 5% in the second quarter even as comparable-stores sales only fell 1% for LB as a whole.
All told, LB last month reported that second-quarter operating income tumbled 24.1% to $228.1 million from $300.9 million a year earlier. Second-quarter net income likewise dropped 28.97% to $99 million from $138.9 million in the same period last year. L Brands also slashed its earnings-per-share guidance for 2018 as a whole to $2.45-$2.70 from a previous $2.70-$3.
All of the bad news had sent L Brands’ shares down some 52% this year even after Friday’s rally. L Brands’ stock has been losing badly to rivals like American Eagle (AEO) , which has seen its stock go up 31.2% this year.
Amazon is a holding in Jim Cramer’s Action Alerts PLUS investors’ club. Want to be alerted before Jim Cramer buys or sells AMZN? Learn more now.
To be a profitable investor and build long-term wealth, you need the right information and techniques. Join TheStreet in New York City on Saturday, Oct. 13, for a special investing event for sophisticated and active traders. Register for “Invest Like the Pros: Jim Cramer’s Boot Camp for Investors” here.
Start and end your trading day right with TheStreet’s new “Daily Snapshot” on your favorite smart speaker. Learn more about TheStreet’s market coverage for your trusted smart speaker here.