L Brands lowers guidance as Victoria’s Secret drags down holiday performance

L Brands’ sales fell in the crucial holiday shopping season amid the ongoing decline of its signature Victoria’s Secret brand. 

The company reported net sales of $3.9 billion for the nine weeks ended Jan. 4, 2020, compared to net sales of approximately $4.1 billion in the year-ago period. Total same-store sales decreased 3% compared to a 4% increase last year.

By brand, Victoria’s Secret same-store sales fell 12% during the November and December shopping season, compared to a 4% decline last year. Comparable sales at Bath & Body Works rose 9%, on top of a 14% increase in the year-ago period.

L Brands now expects to report fourth quarter earnings per share of about $1.85 versus its previous guidance of about $2.00.

In comments, analyst Neil Saunders, managing director of GlobalData Retail, said that while Victoria’s Secret made an effort over the holiday, it did not bear fruit “because, as usual, marketing and merchandising were misplaced.” 

“Consumers were looking for cozy, but the brand delivered risqué,” he said. “That meant many shoppers went elsewhere. In our view, this misalignment between what Victoria’s Secret stands for and what now consumers want is the central issue and is one that the company seems unable to get to grips with.