L Brands, Inc. (NYSE:LB) shares dropped nearly -7% yesterday after the company announced it would be closing an addition 53 Victoria’s Secret stores due to poor holiday sales. L Brands, which also owns Bath & Body Works, reported its fourth-quarter and full 2018 earnings yesterday, which displayed large earnings losses year-over-year.
L Brands and Victoria’s Secret Sales Drop
The sexy lingerie and bra company has lost out on sales recently due to a consumer shift to more comfortable bra brands and styles. American Eagle’s Aerie brand has flourished recently, along with Adore Me, Third Love, and Lively. Target (NYSE:TGT) has also stepped into the $7.2 billion bra industry and plans on launching three new lines of lingerie and women’s sleepwear in the spring.
According to the NPD Group, a third of millennials spent their money on sports bras in 2018. This group makes up for around a third of the women’s intimate apparel market. NPD Group states that overall, sports bra sales are on the rise and contributed to $139 million in sales over the past three years. It’s obvious that Victoria’s Secret’s marketing has been centered on the wrong things, as the company does have its own leisure line.
“Reaching bra consumers, of any age, with targeted messaging and style offerings that have an eye on comfort at all prices is what will differentiate the top players,” said Marshall Cohen, Chief Industry Advisor at the NPD Group.
Currently, Victoria’s Secret has 1,143 stores worldwide, and the company typically closes around 15 a year. In November, L Brand’s CFO told Wall Street analysts that his company would “take a hard look” at its real estate in the next few months. The locations of the Victoria’s Secret store closures remain unknown at this time.
L Brands saw same-store sales fell three percent last quarter. Bath & Body Works sales remain strong. L Brands saw a net income of $540 million in Q4, down from $664 million from the previous year. Net sales for 2018 rose to $4.85 billion, which missed expectations of $4.88 billion.
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