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Victoria’s Secret to close about 53 stores on heels of weak holiday performance

BY Marianne Wilson

L Brands reported mixed results for its crucial fourth quarter amid falling sales at its embattled Victoria’s Secret division.

The retailer plans to close approximately 53 underperforming Victoria’s Secret locations in North America this year. The lingerie chain currently has some 957 U.S. stores. It has been under increased competition in recent years from such newer online and store rivals as Third Love and Aerie that emphasize more inclusive sizing, comfortable fits and body-positive imaging. Victoria’s Secret same-store sales have fallen for the past three years. Its newest rival is Target, which is launching three size-inclusive lingerie and sleepware brands that will target women across different ethnicities, ages and body shapes.

“Given the decline in performance at Victoria’s Secret, we have substantially pulled back on capital investment in that business versus our history,’’ L Brands said in written earnings commentary.

L Brand’s net sales rose to $4.85 billion for the quarter ended Feb.3, compared to $4.82 billion in the year-ago period. Analysts had expected sales of $4.88 billion, Total sales at Victoria’s Secret were $2.531 billion, down from $2.668 billion last year. Total sales at Bath & Body Works were $1.950 billion, up from $1.793 billion.

Total same-store sales, including direct and stores, increased 3%. Total comp sales fell 3% at Victoria’s Secret and increased 12% at Bath & Body Works.

Net income came in at $540 million, or $1.94 per share, for the quarter, down from $664 million, or $2.33 per share a year earlier. Excluding items, L Brands earned $2.14 per share, beating analysts’ expectations of $2.07 per share.

For the full year, L Brands reported net income of $643.9 million and sales of $13.24 billion. Net income for the previous year was $983 million with sales of $12.6 billion. The results were significantly impacted by $99.2 million in expenses related to L Brands’ sale of La Senza.

L Brands forecast total company profit, excluding some items, in a range of $2.20 to $2.60 for this year, well below the average estimate from analysts of $2.71.

L Brands operates 2,943 company-owned specialty stores in the United States, Canada, the United Kingdom and Greater China.

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