Victoria's Secret Owner Drops to Six-Year Low on Weak ForecastBy
Lingerie chain’s sales fell more than expected last quarter
Retailer has struggled to adapt to industry’s bralette trend
L Brands Inc. tumbled to its lowest level in almost six years after disappointing investors with its profit forecast, a sign that the company’s comeback is still a ways off.
Earnings will be 25 cents to 30 cents in the third quarter, the owner of Victoria’s Secret and Bath & Body Works said on Wednesday afternoon. Analysts had been looking for 36 cents on average. Sales at Victoria’s Secret also fell more than projected last quarter.
The outlook underscores the troubles Victoria’s Secret has had connecting with younger customers. Shoppers have been shifting toward cheaper, less-supportive lingerie like bralettes -- a category where the company faces competition from American Eagle Outfitters Inc.’s Aerie brand and e-commerce players. On top of that, consumers are skipping trips to the mall, and many are spending more money on travel and technology than apparel.
Same-store sales at Victoria’s Secret plunged 14 percent last quarter, a deeper drop than the 12 percent decline predicted by analysts. The chain’s decision to stop selling swimwear and other apparel categories weighed on results.
Total sales by that measure fell 8 percent, compared with an estimated decline of 7 percent. One bright spot: Bath & Body Works grew faster than expected in the period. Still, that division only accounts for about 30 percent of revenue.
L Brands also cut its annual earnings forecast to $3 to $3.20, compared with an earlier range of as much as $3.40.
The shares fell 7.5 percent to $36.05 at 9:49 a.m. in New York. The stock had declined 40 percent this year through Wednesday’s close.