L Brands to close 53 Victoria's Secret stores, says 'everything is on the table' for lingerie brand

Key Points
  • L Brands, owner of Victoria's Secret and Bath & Body Works, on Wednesday reports mixed results in the holiday quarter that sent shares of the company down more than 7 percent Thursday morning.
  • Same-store sales at its Victoria's Secret stores have struggled to keep up with changing tastes and new competition and fell 3 percent.
  • The company plans to close 53 Victoria's Secret stores this year.
A shopper carries her purchases along the Magnificent Mile shopping district in Chicago, Illinois.
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"Everything is on the table" for L Brands' struggling Victoria's Secret brand, company executives said Thursday morning, as the company plans to close roughly 53 of its stores in 2019.

The company has pulled back on investing in new and remodeled Victoria's Secret stores and is speeding up its store closure plans from its previous average of roughly 15 store closures a year, executives said during a conference call Thursday. They said the company is evaluating every element of the brand, whether that be merchandising, pricing or format.

The planned store closures for 2019 make up roughly 4 percent of the company's 1,143 Victoria's Secret stores worldwide.

Shares of L Brands, which also owns Bath & Body Works, were trading down more than 7 percent on Thursday morning, after it reported mixed results in the holiday quarter Wednesday evening. The weakest part of its business continues to be Victoria's Secret, where same-store sales fell 3 percent.

"There are no constraints. We are not financially constrained, and we've got a lot of different things that we have and can consider," company executives said, according to a preliminary transcript from Factset. They emphasized, though, that the company's dominant focus will be on Victoria's Secret merchandising.

The brand, which was once known for its sexy bras, has lost out as women have switched to more comfortable bra styles and brands that seem more inclusive from the likes of American Eagle's Aerie, Third Love, Lively and Adore Me. The $7.2 billion bra category is also seeing new competition from Target, which this spring plans to launch three new lines of lingerie and sleepwear.

Millennials, who comprise more than a third of the women's intimate apparel market, spent a third of their bra dollars in 2018 on sports bras, according to retail trade group the NPD Group.

Bath & Body Works, meantime, continues to perform strongly. The fragrance and personal care shop grew same-store sales by 12 percent.

Dragged down by the weakness at Victoria's Secret, L Brands same-store sales fell 3 percent in the latest period.

L Brands reported fiscal fourth-quarter net income of $540 million, or $1.94 per share, down from $664 million, or $2.33 per share a year earlier. Excluding items, L Brands earned $2.14 per share, beating the $2.07 per share expected by analysts surveyed by Refinitiv.

Net sales rose to $4.85 billion, missing expectations of $4.88 billion.

L Brands said it expects earnings for 2019 will fall between $2.20 and $2.60 a share. That includes break-even earnings per share result in its first quarter.

How Victoria's Secret revolutionized lingerie — then fell behind
How Victoria's Secret revolutionized lingerie — then fell behind