Victoria’s Secret brand of L Brands is struggling, said company executives on Thursday, as the company plans on closing about 53 of its stores this year. All plans of investments in new and remodeled stores of Victoria’s Secret have been kept on hold for now as the company is speeding up store-closing processes from the earlier average of about 15 annual store closures. Every element related to the brand is currently being evaluated, from format and pricing to merchandising. The store closure plans for 2019 constitute about 4% of the total 1,143 Victoria’s Secret stores located worldwide.
L Brands’ shares, the company which is also the owner of Bath and Body Works, had been trading down over 7% on Thursday morning, following reporting of mixed results during the holiday quarter on Wednesday evening. The weakest segment of L Brands’ business remains Victoria’s Secret, where sales of same stores slipped down by 3%. Company executives stressed on the fact that Victoria’s Secret merchandising will be dominantly focused on by the company. The falling sales of Victoria’s Secret are mainly due to shoppers switching to more comfortable brands and styles which seem more comprehensive from likes of Adore Me, Lively, Third Love and American Eagle’s Aerie. The bra category, worth $7.2 Billion, is also facing stiff competition from Target that plans on launching 3 new lines of sleepwear and lingerie this spring. Reports also suggest that Millennials, comprising over a third of intimate apparel market of women, spent 1/3rd of their bra dollars on sports bras in 2018.
Bath and Body Works continues to do well with 12% growth in same-store sales. Even with good performance of the personal care and fragrance shop of L Brands, its same-store sales dropped 3% in latest period because of weak sales of Victoria’s Secret. Fiscal 4th-quarter net income of L Brands was reported to be $540 Million or $1.94 a share, which is a drop from $664 Million or $2.33 a share in the previous year. The company earned $2.14 a share excluding items, surpassing expectations of earnings of $2.07 a share. Net sales were recorded as $4.85 Billion, compared to expectations of $4.88 Billion. 2019 earnings of L Brands are expected to fall between $2.20 and $2.60 per share, including break-even earnings per share results in 1st-quarter.