Victoria's Secret store London, UK - 2017

Concern is growing over L Brands Inc.’s ability to turn things around after months of sales declines.

The operator of Victoria’s Secret and Bath & Body Works on Thursday reported June financial figures that had overall sales down 6 percent to $1.2 billion and comparable store sales down by 9 percent, mainly due to weak Victoria’s Secret sales. This marks L Brand’s sixth straight month of declines.

Wall Street was understandably not pleased with the results and by Friday had sent the company’s stock down just over 15 percent to $45.96, a three-month low and the second-lowest price over the last year.

Although L Brands has continued to cite its decision last spring to exit swimwear and most apparel from Victoria’s Secret and abandon its well-known catalogue business, those headwinds appear to be only part of what’s behind the ongoing struggles. Analysts are starting to wonder if the company’s plans of 10 percent growth for full year operating income are still feasible.

“Unfortunately, with June’s miss, it likely leaves investors questioning if there is real credibility to the turnaround story at VS,” Wells Fargo analyst Ike Boruchow said in a note.

He added that, despite L Brands’ plans for things to improve markedly in the second half of the year and an expectation that the absence of swim and apparel will be much less of an issue as the months go on, earnings growth “does not seem like a given today.”

As for how meaningful the absence of swim and apparel from Victoria’s Secret is, with the company attributing 10 percent of the retailer’s 17 percent comp decline in June to the exit, Boruchow instead pointed to continually dim lingerie sales and “weaker-than-expected traffic trends.”

Simeon Siegel of Nomura Securities echoed that sentiment in a note, adding “we expect mall challenges to persist” despite seeing Victoria’s Secret as “stronger than the rest of the mall.”

Brian Tunick, an analyst with RBC Capital Markets, said the absence of swim and apparel has indeed created a sizable drag for Victoria’s Secret over the last year, but L Brands will not be able to keep explaining declines in this way for much longer.

“July is the last big one,” Tunick said of the exits weighing on Victoria’s Secret. “But June should mark the low point and it should start moving up.”

He added that “come September, we’ll know if this decision to walk away from the categories is the real heart of the weakness,” or if it’s more related to ever-declining mall traffic and maybe even the possibility that Victoria’s Secret has lost its dominant position in the intimates space.

Starting in July, products under new Victoria’s Secret president Jan Singer will begin to hit stores, leaving some hope for positive comps, which have to start happening soon for L Brands to hit its current guidance.

“The guidance assumes that comps go positive, so we have to go from comps down 17 percent to positive in the back half of the year,” Tunick noted with a slightly incredulous air. “If that doesn’t happen, and we’re not seeing at least flat to slightly positive comps [in the coming months], investors will worry. There’s a lot of fear out there already.”

While there is plenty for investors to worry about when it comes to retail, Tunick said L Brands’ chief executive officer Leslie Wexner “is one of the geniuses of retail” and not someone to bet against. But patience is wearing thin.

“People are very nervous about Amazon growing, mall traffic declines every week, so they are not going to keep giving the company the benefit of the doubt,” Tunick said.

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