L Brands increases by 5.6% on its plans to close the Henri Bendel chain

L Brands (LB), the besieged owner of Victoria's Secret and other chain stores, jumped 5.6% on Friday to close at $ 28.97 after announcing plans to close 23 Henri Bendel stores, who are losing money.

"We have decided to stop operating Bendel to improve the profitability of our company and focus on our leading brands with higher growth potential," said Leslie Wexner, L Brands Chief Executive Officer, in a statement. .

Henri Bendel – an upscale women's fashion retailer who sells handbags, jewelry and other similar items – has stores in 11 states, in addition to a flagship location along the Fifth Avenue New York. L Brands plans to close the chain in early January after the holidays. The company estimates that Henri Bendel will post an operating loss of approximately $ 45 million in 2018 excluding charges for liquidation.

Store closures often result in a drop in a retailer's stock, as they may indicate that a business is losing to the benefit of Amazon's e-commerce giant (AMZN). For example, J.C. Penney (JCP), which has been closed for a few years, is down 40.1% this year.

But investors seemed encouraged Friday by the announcement of L Brands, even though the company's other brands – including Victoria's Secret, Pink and Bath & Body Works – also did not look good. perform. For example, the flagship product of Victoria's Secret, one of L Brands' most distressing businesses, recorded a 5% drop in comparable sales in the second quarter, even though comparable sales did not improve. fell by only 1% a set.

In total, LB announced last month that second-quarter operating profit fell 24.1 percent to $ 228.1 million from $ 300.9 million a year earlier. Second quarter net income also declined 28.97% to $ 99 million from $ 138.9 million for the same period last year. L Brands also trimmed its earnings per share forecast for 2018 to $ 2.45-2.70 from $ 2.70-3.

All the bad news has dropped L Brands shares by 52% this year, even after Friday's rally. L Brands shares were penalized by competitors such as American Eagle (AEO), which saw its stock rise 31.2% this year.

Amazon is a stake in Jim Cramer's Action Alerts PLUS Investor Club. You want to be alerted before Jim Cramer buys or sells AMZN? Learn more now

To be a profitable investor and create wealth in the long run, you need the right information and techniques. Join TheStreet in New York on Saturday October 13 for a special investment event for sophisticated and active traders. Sign up for "Invest Like the Pros: Boot Camp for Jim Cramer Investors" here.

Start and end your trading day with TheStreet's new "Daily Snapshot" on your favorite smart speaker. Learn more about TheStreet's market coverage for your trusted smart speaker here.