L Brands’ sales up in November
Columbus-based retailer L Brands reported a rise in comparable store sales in November, indicating a good start to the Christmas shopping season and a hint that the company’s embattled Victoria’s Secret brand may be on the upswing.
Shares of L Brands rose by 1.15 percent at the news.
The parent company of Victoria’s Secret and Bath & Body Works reported comparable sales increased 9 percent for the month, with sales at Victoria’s Secret up 2 percent and at Bath & Body Works up 18 percent. Overall monthly sales rose to $1.6 billion, up from $1.3 billion for the same month last year.
The November sales uptick was “driven by growth in lingerie and beauty, partially offset by a decline in Pink,” the sub-brand focused on college-age women, said Amie Preston, chief investor relations officer. “Early holiday sales performance has been in Comparable store sales at Victoria’s Secret stores rose 2 percent in November, below Wall Street expectations, L Brands reported Thursday.
line with expectations, with a record Cyber Monday.”
The biggest factor in L Brands’ good month was the “staggering” rise in sales at Bath & Body Works, said analyst Kimberly Greenberger in a note to investors. Those sales, which exceeded expectations at both L Brands and on Wall Street, were driven
by record sales volume on key days, and included a healthy profit margin.
The numbers were driven by “a strong Thanksgiving weekend performance and an exceptionally strong ‘Candle Day’ (December 1)” and fewer discounts than Bath & Body Works offered in November last year, Greenberger said.
That hasn’t been the case at Victoria’s Secret, where profit margins were “down significantly ... and below expectations,” Greenberger said, as Victoria’s Secret continues to offer deep discounts to bring customers to stores. The lingerie chain has been under scrutiny by Wall Street recently as sales have slumped and some critics have derided the lingerie chain’s annual fashion show as out of touch with women during a time when the #MeToo movement has been gaining attention.
However, sentiment toward the brand may be on the upswing. While survey results from brand-insights firm YouGov last April showed a slight decline in esteem among customers since 2013, the most recent survey last week reported that consumer feelings about the brand have improved in the past few months among women ages 18 to 49.
The real cause of Victoria’s Secret struggles seems to have been a combination of several unforced errors by management and a slip in merchandise quality, analysts say.
Wells Fargo analysts recently said that L Brands executives made several errors in their attempt to refocus the brand on its core businesses, including ending the lingerie brand’s catalog, reducing direct mail offers, and dropping swimwear and other apparel categories.
L Brands has acknowledged its errors and last month told analysts that it will re-enter the swimwear business by spring and has started selling boots and plans to sell sunglasses, too, among other changes.
While the moves are prompted by what customers are telling the company, the full impact of the changes — including a new Victoria’s Secret Lingerie CEO, who will come on board soon — “is unlikely until the second half of 2019 at the earliest,” Greenberger said.