L Brands sees first-quarter loss, takes $725 mln write-down on Victoria's Secret

FILE PHOTO: A customer passes by an L Brands Inc., Victoria's Secret retail store in Manhattan, New York, U.S., May 13, 2016. REUTERS/Brendan McDermid/File Photo

(Reuters) - L Brands Inc LB.N forecast a loss for the first quarter, days after it decided to sell a controlling stake in its struggling Victoria's Secret brand, and said on Wednesday that it took a $725 million impairment charge related to the struggling lingerie unit in the fourth quarter.

The Columbus, Ohio-based company has seen Victoria’s Secret lingerie sales dwindle in recent quarters as customers increasingly prefer inclusive brands and more comfortable alternatives as those from online startup Third Love.

To cut its losses, L Brands earlier this month said it would sell a 55% stake in Victoria’s Secret to investment firm Sycamore Partners, a year after offloading its luxury lingerie brand La Senza.

In the fourth quarter ended Feb. 1, comparable sales at Victoria’s Secret fell 10%, while analysts were expecting a 8.89% decline.

For the current quarter, the Bath & Body Works cosmetics maker expects a loss of 5 cents per share on an adjusted basis, while analysts on average were expecting it to earn 10 cents per share, according to IBES data from Refinitiv.

The company posted a quarterly net loss of $192.3 million, or 70 cents per share, compared with a profit of $540.1 million or $1.94 per share a year earlier, mainly due to the write-down on Victoria’s Secret’s goodwill and store-related assets.

Excluding items, however, L Brands earned $1.88 per share, beating analysts’ estimates of $1.86.

Net sales fell 3% to $4.71 billion, but were ahead of analyst estimates of $4.69 billion.

Reporting by Praveen Paramasivam in Bengaluru; Editing by Arun Koyyur and Shailesh Kuber