L Brands is shrinking the store portfolio of its struggling Victoria’s Secret division.
On a call with analysts to discuss first-quarter earnings, the company said it plans to permanently close 250 Victoria’s Secret and Pink stores in the U.S. and Canada in 2020. The shutterings amount to approximately one-quarter of the lingerie chain’s locations in North America. (As of May 2, there were 1,070 Victoria’s Secret and Pink locations in North America.)
“We would expect to have a meaningful number of additional store closures beyond the 250 that we’re pursuing this year ... meaning there will be more in 2021 and probably a bit more in 2022,” Stuart Burgdoerfer, interim CEO of Victoria’s Secret, said on the call.
L Brands also plans to permanently close some 50 Bath & Body Works stores this year, which translates to about 3% of the brand’s footprint in North America.
In February, L Brands it announced it was selling a majority stake (55%) stake in Victoria's Secret to private equity firm Sycamore Partners for about $525 million. But on May 4, the two companies announced they were terminating the deal, “by mutual agreement,” largely became of the Covid-19 pandemic, with L Brands saying it intended to spin-off its Victoria's Secret business as a standalone company.
L Brands said it is still committed to making Bath & Body Works a “pure-play public company,” with Victoria’s Secret operating as its own standalone business.
For the quarter ended May 4, 2020, L Brands’ total sales fell 37% to $1.65 billion.
Victoria’s Secret’s same-store sales were down 13%. Bath & Body Works’ same-store sales jumped 41%, which the company credited partially to sales of sanitizer and soaps amid the pandemic.
The company reported a loss per share of $1.07 for the first quarter compared to earnings per share of $0.14 last year. First quarter operating loss was $317.7 million compared to operating income of $153.3 million last year, and net loss was $296.9 million compared to net income of $40.3 million last year.