The struggle continues.
Victoria’s Secret owner L Brands Inc.’s shares slipped as much as 4 percent in post-market trading after it downgraded its full-year forecast, despite second quarter earnings topping Wall Street expectations.
The company, which owns Victoria’s Secret and Bed Bath & Beyond among others, changed its guidance for 2018 full-year earnings per share to $2.45 to $2.70, from $2.70 to $3 previously.
Second-quarter net income came to $99 million, compared to $138.9 million last year, while earnings per share for the second quarter were 36 cents, down from 48 cents.
Net sales came in at $2.98 billion, compared to sales of $2.76 billion during the same period in 2017. Comparable sales increased 3 percent.
Although it still retains a commanding share in the market, the lingerie brand has been struggling as it searches for a way to connect to a younger shopper with a different sensibility.
Earlier in the week, analysts at Jefferies went as far as to describe the Victoria’s Secret brand as “broken” and cautioned that Victoria’s Secret Pink “is now breaking.”
“Specifically, pricing power continues to erode as promos continue to rise, yet the consumer isn’t responding,” the analysts said in a note. “Even more troubling is our data sets are also showing Pink pricing falling and promos even deeper, which is a major red flag considering Pink is a $3B+ biz and accounted for all of VS segment growth over the past five years.”
L Brands also disclosed Wednesday that Denise Landman, chief executive officer of Victoria’s Secret Pink, has made the decision to retire at the end of this year.
She will be replaced by Amy Hauk, president for merchandising and product development of Bath & Body Works. Landman will remain in the business through the end of the year to onboard Hauk and facilitate the transition.
Leslie H. Wexner, chairman and ceo of L Brands, said: “I’m grateful to Denise for leading the growth of the Pink business and building such a strong high-performance team. Denise has always been a curious student of the business, focused on the customer and driven by her entrepreneurial spirit. Her contagious passion for the brand has built a true ‘Pink Nation’ experience among college-age women and created one of the fastest growing specialty retailers of all time.”
He also lauded Hauk’s “track record of accurately identifying what’s next in the market,” adding that she’s “curious and action oriented. She leads with pace and energy. Since joining Bath & Body Works 10 years ago, she has built a solid, talented merchant team who is well prepared to continue the momentum in the business.”