L Brands Inc. expects more pain as it works through its refocusing at Victoria’s Secret.
The retailer, which also operates Bath & Body Works, said its third-quarter profits fell 25.8 percent to $121.6 million, or 42 cents a diluted share, from $164 million, or 55 cents. L Brands prepped investors for the drop earlier this month.
Sales rose 4 percent to $2.58 billion from $2.48 billion with Victoria’s Secret posting a comparable sales decline of 2 percent and Bath & Body Works comping up 5 percent.
Retail veteran Leslie Wexner, chairman and chief executive officer, took the reins of Victoria’s Secret in February and started to focus the uber-sexy brand, cutting away apparel and swim and reducing promotions.
Those adjustments have led to tough times for the label this year, but are intended to set the business up for continued global growth.
Wexner told analysts last month that L Brands is at an “inflection point.”
“We had to make changes and in hindsight, the changes that we have made I wish we had taken those actions two years ago, or three,” he said. “In hindsight, there was ample opportunity to change things dramatically.”
He said Victoria’s Secret “just got older with the customer.” Now he’s targeting a younger consumers, for instance focusing more on the unstructured bralette that’s popular with Millennials.
By the second half of next year, the company is looking for revenues to grow 7 to 10 percent.
But Wall Street remains antsy for a turn and L Brands said its fourth quarter earnings per share would tally $1.85 to $2 a share, down from the $2.15 the retailer achieved a year ago and the $2.03 analysts were projecting. The firm, however, is known for its conservative guidance.
Shares of L Brands slipped 2 percent to $66.60 in afterhours trading on Wall Street. The company will offer more prospective on the quarter and its outlook on a call Thursday morning.