Victoria's Secret owner raises profit target again on stimulus boost
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FILE PHOTO: A shopper passes by a Victoria's Secret retail store, as the global outbreak of the coronavirus disease (COVID-19) continues, in Brooklyn, New York, U.S., December 8, 2020. REUTERS/Brendan McDermid
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(Reuters) - Victoria's Secret owner L Brands raised its current-quarter profit forecast for the second time this month as customers use stimulus checks to buy everything from scented candles to lingerie, sending its shares to a three-year high.
The company on Friday also cited the unusual shifts in spending patterns and relaxation of COVID-19 restrictions for the upbeat first-quarter forecast.
Analysts have said that retailers are set to benefit from the $1.9 trillion aid bill passed earlier this month that included $1,400 checks for eligible families.
The company's Bath & Body Works business has boomed in recent quarters as a sharper focus on hygiene standards and increased interest in skin-care by home-bound customers during the pandemic lifted demand for soaps, lotions and sanitizers.
This prompted L Brands to raise its profit target for the current quarter earlier this month.
The Ohio-based company's shares, which have gained about 60% since the start of the year, rose as much as 8% to a near three-year high of $64.08 on Friday.
L Brands, which is separating its Victoria's Secret business later this year, has managed its inventory well to avoid heavy discounting that has plagued some U.S. retailers.
The company said on Friday it expects an adjusted profit of 85 cents to $1 per share in the first quarter, up from its previous raised forecast of 55 cents to 65 cents per share.
Analysts were expecting 62 cents per share, according to IBES data from Refinitiv.
Still, L Brands cautioned that it was not sure whether these improved trends would extend into the future.
The company is scheduled to report its first-quarter results after markets close on May 19.
(Reporting by Mehr Bedi in Bengaluru; Editing by Maju Samuel and Sriraj Kalluvila)
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