L Brands shares rally despite continued sales declines at Victoria’s Secret

FAN Editor

People walk past a Victoria’s Secret store in Barcelona.

John Milner | LightRocket | Getty Images

Victoria’s Secret has yet to stem its sales declines, but the company is hopeful that new products will win back customers.

The brand is pursuing “more elevated product — more glamour, more fashion, a lot of emotional content,” said L Brands CFO Stuart Burgdoerfer in the company’s third-quarter earnings call Thursday morning.

Its investments in higher quality fabrics and design aesthetic, particularly in the sleep and lounge-wear category, have “gotten a strong consumer response” so far, Burgdoerfer said. 

Some analysts, however, are not as optimistic for the company’s future. Jeffries analyst Randal Konik noted Wednesday that stronger sales at PINK were simply due to higher amounts of promotions.

But shares of Victoria’s Secret parent company L Brands were up more than % in midday trading in the wake of its fiscal third-quarter results. Although the company fell short of revenue estimates, its adjusted earnings were in-line with analyst estimates. It also estimated fiscal 2019 earnings would be within a range it forecast previously. 

At Victoria’s Secret same-store sales were down 7% during the quarter. Victoria’s Secret same-store sales growth has declined for the past six quarters.

Burgdoerfer doesn’t expect the cancellation of this year’s Victoria’s Secret fashion show, to impact its fiscal fourth-quarter earnings. He said there never was a material financial impact after the show, though it nonetheless helped building the Victoria’s Secret brand.

At L Brands’ Bath & Body Works same-store sales rose 9% during the quarter. Burgdoerfer said that overall traffic and same-store sales at these stores are healthy and relatively stable.

The brand, however, has seen slowing same-store sales growth, and some analysts, including Konik have been concerned that its growth has peaked. 

L Brands shares are down more than 32% year to date.

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