L Brands (LB - Get Report) , 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 - Get Report) . For example, J.C. Penney (JCP - Get Report) , 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 - Get Report) , which has seen its stock go up 31.2% this year.
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