L Brands problems extend beyond Victoria’s Secret bras to Bath & Body Works分享自Wind资讯金融终端

L Brands problems extend beyond Victoria's Secret bras to Bath & Body Works分享自Wind资讯金融终端
2017-09-01 03:50:30

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Victoria's Secret has struggled recently, and Bath & Body Works may follow suit

August was another struggle for Victoria's Secret parent L Brands Inc., with the company reporting a 8% same-store sales decline, largely due to category exits at the lingerie chain.

Declines at the company's Bath & Body Works chain have Instinet analysts sounding an alarm, especially because L Brands is investing in store remodels.

L Brands LB, +0.42% reported sales of $842.1 million for the four weeks ending August 26, down from $852.9 million for the same period last year. Same-store sales were hurt by Victoria's Secret's exit from the swim and apparel categories, which reduced overall same-store sales by 2 percentage points, and Victoria's Secret's same-store sales by 3 percentage points.

The termination of the swim and apparel businesses has become a large hurdle for L Brands. The company said the move would free it up to focus on the core lingerie business, but experts say the brand has missed some key bra trends, adding to the sales pinch.

See also:Victoria's Secret has a bra problem

Beyond the issues at Victoria's Secret, Instinet analysts led by Simeon Siegel say they are concerned about same-store sales and margins at Bath & Body Works, which is focused on skincare and fragrance products.

"With a flat store comp this month, following a negative store July comp after a three-month positive mid-single digit stretch, Bath & Body Works stores have now comped negatively 43% of fiscal 2017," a Thursday note said. "As we've been noting, the downturn in Bath & Body Works comps (which now appears to be coupled with merchandise margin pressure as well) raises concerns given L Brand's stated mall-based investment with Bath & Body Works/White Barn remodels."

On the August 17 quarterly earnings call, executives talked about the investment in "newness" at Bath & Body Works, both in product updates and in stores. By the end of the year, 420 stores will be revamped, according to Bath & Body Works Chief Executive Nicholas Coe. The company views these investments as important to "brand health," Coe said, according to a FactSet transcript.

However, as widely reported, shoppers have not been going to the mall like they used to. Starbucks Corp. SBUX, +0.70% for example, is shutting its mall-based Teavana stores because, despite the company's best efforts, Chief Executive Kevin Johnson said the chain's underperformance would continue.

Read also:Starbucks sued by mall owner Simon over plan to shut Teavana stores

Don't miss:Starbucks' Teavana stores are the latest casualty at the mall

For the month of August, Bath & Body Works same-store sales were up 4% on top of a 7% increase last year. A merchandise margin rate decline was due to increased promotion and product mix, according to a FactSet transcript of remarks from Amie Preston, L Brands' chief investor relations officer.

The company expects a low-single digit decline for September, including a two-point negative impact from the swim and apparel exits.

L Brands shares are up 0.3% in Thursday trading, but down more than 45% for the year so far. The S&P 500 index SPX, +0.62% is up 10.4% for 2017 to date.

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