L Brands (LB) reports that earnings for the fourth quarter of 2020 have been very strong

Brands, Victoria’s Secret’s parent company, reported fourth-quarter earnings on Wednesday that exceeded analysts’ estimates, but sales fell short due to the weakness of its underwear brand.

While the retailer offers no year-round outlook due to uncertainty about the pandemic and the pending separation of Bath & Body Works ’Victoria’s Secret brand, it provided an optimistic earnings outlook for the first quarter, saying it’s being built by the momentum he saw during the holidays. Sales were said to have been strong through February.

Shares of L Brands rose about 5% in overtime trading.

Here’s how the company did during the fourth quarter ended Jan. 30 compared to what analysts expected, according to Refinitiv data:

• Earnings per share: $ 3.03 vs. $ 2.91 expected
• Revenue: $ 4.82 million, compared to the projected $ 4.87 million

L Brands posted a net profit of $ 860.3 million, or $ 3.03 per share, compared to a loss of $ 192.3 million, or 70 cents per share, a year earlier. The results exceeded analysts’ expectations of $ 2.91 per share.

Net sales grew to $ 4.82 billion, up from $ 4.71 billion years ago. This was below the $ 4.878 billion expected by analysts.

Sales at the same store increased 10%, better than the 6.7% increase predicted by a Refinitiv survey. Within that, Victoria’s Secret’s in-store sales fell 3%, but the drop was offset by 22% in-store sales growth at Bath & Body Works.

The company has managed to increase its profitability by reducing inventory levels and selling more items at full price. By relying less on discounts to attract buyers, L Brands said it saw a significant improvement in both average unit prices and merchandise margin rates during the fourth quarter.

For the first quarter, L Brands is asking for earnings per share to be between 35 and 45 cents. This is ahead of analysts ’estimates of 12 cents per share.

It expects first-quarter sales to be roughly low compared to 2019 levels, at $ 2.6 billion. Again, Bath & Body Works will experience stronger growth, while sales remain under pressure on Victoria’s Secret due, in part, to the continued closure of stores.

Management also said Wednesday in prepared statements that L Brands continues to advance its plans to separate Victoria’s Secret from Bath & Body Works, which it hopes to complete in August.

“Over the next 6 months, we will continue to work for the separation of the two companies, proceeding in a two-way way to prepare a derivation or sale,” the company said.

Brands had signed a deal to sell Victoria’s Secret last year to private equity firm Sycamore Partners. But the $ 525 million deal collapsed as the pandemic temporarily closed the retailer’s brick and mortar stores.

Victoria’s Secret has been trying to revive its brand, which sells everything from underwear and perfume, to pajamas and loungewear, as consumers have increasingly opted for bras and underwear with more inclusive marketing messages.

Brands will have to hold a conference call with analysts Thursday morning to discuss the latest results.

Its shares have risen 119% in the last twelve months, since the market closed on Wednesday. L Brands has a market cap of $ 14.36 billion.

Find the full L Brands press release here.