What happened

Shares of Victoria's Secret and Bath & Body Works parent L Brands (NYSE:LB) declined 21.9% in the month of August, according to data provided by S&P Global Market Intelligence, after the company announced disappointing second-quarter 2017 sales results and light guidance.

More specifically for its quarter ended July 29, 2017, L Brands' revenue declined 4.7% year over year to $2.755 billion. On the bottom line, that translated to a 31% decline in adjusted net income to $138.9 million, or $0.48 per share. Interestingly, these results compared favorably to Wall Street's expectations, as consensus estimates called for earnings of only $0.44 per share on roughly the same revenue.

Bath & Body Works store interior

Image source: L Brands. 

So what

But L Brands management noted that the top line was hurt by a weaker-than-expected 8% comparable sales decline, which meant revising its forward guidance to assume a more conservative sales forecast for the full year. As such, L Brands reduced its full fiscal-year 2017 guidance for earnings per share to be in the range of $3.00 to $3.20, below the $3.23 analysts were expecting and down from $3.10 to $3.40 previously.

In addition, L Brands called for current fiscal third quarter earnings per share to be in the range of $0.25 to $0.30, also below consensus models for fiscal Q3 earnings of $0.36 per share.

Now what

That said, L Brands subsequently offered investors more positive news at the end of the month, when it revealed that August sales had fallen just 1% year over year on a 4% comparable-store sales decline. And comps would have been down only 2% were it not for L Brands' decision to exit the swim and apparel segment at Victoria's Secret.

L Brands stock jumped a modest 3.4% following the report, leaving investors with quite a ways to go before they fully recoup last month's losses. But it's hard to blame the market for its optimism; if L Brands' flagship stores can sustain this momentum through the duration of the current quarter, there's a chance its decision to reduce guidance last month could prove unmerited.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.