L Brands Inc. held its earnings conference call on Thursday following the release of its earnings on Wednesday after the market close.
The company gave more insight behind the changes taking place at Victoria’s Secret as analysts peppered the executives with questions. The changes included the exiting from categories like swim, shoes and accessories. Victoria’s Secret also revealed that Jan Singer would be the new chief executive officer; he previously was ceo of Spanx. The company repeatedly stated the changes were meant to get the company focused on its core product and simplify the product assortment.
Omar Saad, an analyst with Evercore ISI, asked for specifics regarding the bra business and especially the bralette trend. Victoria’s Secret sales increased over last year, but the rate of growth has slowed.
“The total bra business including Pink is up,” said chief financial officer Stuart Burgdoerfer, “Certainly some changes in the trend that you comment on and that we are participating in. We’re not satisfied with a bra business that — we want it to grow faster than that. It’s not a sick business, but it’s not growing at the rate we want.”
Burgdoerfer did say that all types of bras across both channels had positive sales growth. But Saad’s question points to investor concern that the trend of push-up bras is waning.
The company also made it clear to analysts that the decision to pull back on the catalog and printed promotions was the right one. Burgdoerfer said that it cost the company $125 million to $150 million a year to do the catalog.
“If one does the simple math on it, we need to get a lot of sales or a meaningful amount of sales to pay for the catalog,” he said. He pointed out that the company reduced the catalog activity by 40 percent and online sales rose 15 percent. He also noted that if L Brands was starting business today, it would not use a paper-based catalog sent through the mail.
Burgdoefer said the direct mail campaigns of a free panty or $10 off a bra needed to be retired. They had been running for a long time and he found that customers came to the store, claimed their free panty and then didn’t buy anything.
The company wants to achieve a seamless customer experience so that the product online is the same as the product in the store.
L Brands shares fell 4.6 percent Thursday to close at $60.62.