L Brands’ sales up in Novem­ber

The Columbus Dispatch - - Front Page - By Tim Feran [email protected]­patch.com @tim­feran

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.

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