Victoria's Secret's parent company L Brands is about to shut more than 200 stores in malls and shopping centers across the country this year. And it expects even more closures for its struggling bra business are looming.
When it released its fiscal first-quarter earnings Wednesday evening, the Ohio-headquartered retailer said it plans to shut permanently about 250 Victoria's Secret and Pink stores in the U.S. and Canada in 2020, or roughly a quarter of its shops in North America. It also is planning to close 50 Bath & Body Works shops for good this year, or about 3% of that business in North America.
But that is just the beginning of the rout. L Brands' business was floundering before the coronavirus pandemic, but when its stores were forced shut, its troubles worsened.
"We think there will be more store rationalization over the next several years as well," interim Victoria's Secret CEO Stuart Burgdoerfer said Thursday morning during a call with analysts.
"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," he added, declining to put a number to those years.
A spokesperson for L Brands further declined to provide a list of the locations set to close this year.
As of May 2, L Brands was operating 1,070 Victoria's Secret and Pink locations in North America, according to its website.
During the first quarter, L Brands' net sales tumbled 37% to $1.65 billion from $2.63 billion a year ago. Victoria's Secret's same-store sales were down 13%, while they surged 41% at Bath & Body Works.
L Brands is facing additional pressures after its plans to sell a controlling stake in Victoria's Secret to private-equity firm Sycamore Partners were shattered because of the Covid-19 crisis.
It said this week that it still aims to make Bath & Body Works a "pure-play public company," with Victoria's Secret operating as another standalone business.
L Brands said it is currently talking to its landlords about the 250 closures slated for 2020. And this will add to a glut of retail real estate going back on the market. J.C. Penney is planning to close more than 240 stores as part of its bankruptcy proceedings. Pier 1 Imports is liquidating its business. Nordstrom is closing 16 department stores because of the Covid-19 crisis.
L Brands shares were up more than 16% Thursday morning. The stock has dropped about 21% this year. L Brands has a market cap of about $3.9 billion.