Victoria Secret's parent stock falls on weak holiday sales and trimmed forecast - CNBC

Pedestrians walk past a Victoria's Secret store, a subsidiary of L Brands, in New York.

Craig Warga | Bloomberg | Getty Images

Victoria's Secret parent company L Brands said its holiday sales shrunk, leading the retailer to cut its earnings outlook for the fourth quarter.

The news comes on the heels of L Brands promising investors in September that an "evolution" was ahead for the embattled lingerie brand. But there weren't many bright spots in its reports on Thursday.

To stem sales declines, L Brands has promised to use a more diverse group of models in its Victoria's Secret marketing and advertising — that will reflect women of all shapes and sizes. It has vowed to make more trend-right and comfortable products, to try to win back the customers who have fled its stores for the likes of ThirdLove and Adore Me. But that didn't come in time for the holidays.

Shares of the company fell more than 4% in premarket trading.

L Brands now expects to report fourth-quarter earnings of $1.85 per share, down from its previous forecast of $2.00 per share.

During the nine weeks that ended Jan. 4, L Brands saw net sales of $3.9 billion, down from $4.1 billion a year ago. Same-store sales declined by 3%.

Victoria's Secret's same-store sales across its stores and direct channels shrank by 12% during the holiday season, a much steeper drop than the previous year's decline of 4%.

Its Bath & Body Works division reported same-store sales growth of 9%. Sales of scented candles and lotions have been propping up L Brands' otherwise increasingly outdated bra and underwear business. But some analysts have said even Bath & Body Works' best days are over.

"Bath & Body Works' top line has been great but margins are beginning to erode and compares are daunting," Jefferies analyst Randy Konik said in a note to clients earlier this month.

"Candle penetration is maxing out," he added. "Over time, BBW.com likely will have to offer more 'free shipping' offers and its products are heavy, which adds to shipping expense. ... These factors will cause margins to erode further in the segment."

L Brands shares, as of Wednesday's market close, are down about 35% over the past 12 months. The retailer has a market cap of $5 billion.

Read the full press release here.

Let's block ads! (Why?)

https://news.google.com/__i/rss/rd/articles/CBMiXmh0dHBzOi8vd3d3LmNuYmMuY29tLzIwMjAvMDEvMDkvdmljdG9yaWEtc2VjcmV0cy1wYXJlbnQtc3RvY2stZmFsbHMtb24td2Vhay1ob2xpZGF5LXNhbGVzLmh0bWzSAWJodHRwczovL3d3dy5jbmJjLmNvbS9hbXAvMjAyMC8wMS8wOS92aWN0b3JpYS1zZWNyZXRzLXBhcmVudC1zdG9jay1mYWxscy1vbi13ZWFrLWhvbGlkYXktc2FsZXMuaHRtbA?oc=5

2020-01-09 12:52:00Z
CAIiEKavKzgmmAlQ0OYHfq9G7ZMqGQgEKhAIACoHCAow2Nb3CjDivdcCMJ_5ngY