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Victoria’s Secret Owner Soars 15% as Beauty Chain Boosts Sales

While L Brands’ beauty and skin care chain is going gangbusters, its Victoria’s Secret unit is still struggling.

Victoria’s Secret Owner Soars 15% as Beauty Chain Boosts Sales
An employee assists a traveler inside a Victoria’s Secret Stores LLC store, a subsidiary of L Brands Inc., at the Tan Son Nhat International Airport in Ho Chi Minh City, Vietnam. (Photographer: Maika Elan/Bloomberg)

(Bloomberg) -- L Brands Inc. rose in late trading after the company boosted the lower end of its full-year guidance as its Bath & Body Works brand continues to log double digit sales growth.

  • Same store sales at Bath & Body Works rose 13%, a performance the company said “significantly exceeded our expectations.” Comparable sales at L Brands, including both in-store and direct-to-consumer sales, was flat last quarter, dragged down by weaker results at Victoria’s Secret.

Key Insights

  • While its beauty and skin care chain is going gangbusters, its Victoria’s Secret unit is still struggling. Same-store sales there fell 5% in the quarter. Still, investors may be hopeful change is afoot: The company recently said it would change the way it does its annual fashion show, suggesting it’s open to criticism after years losing market share to upstarts.
  • “We are clearly not satisfied and are working hard to improve performance,” L Brands said, referring to the results at Victoria’s Secret. The company called out declining comparable sales in its lingerie business, where margins were hit by over-discounting, and falling same-store sales at its youth-targeted PINK line.
  • As tariffs quickly race to the top of executive’s concerns, L Brands said the majority of its products for Victoria’s Secret Beauty and Bath & Body Works products are sourced in the U.S. Its lingerie and apparel is produced “across a well-diversified group” of countries, mostly Asian, with China representing less than 20% of the total. The company said it’s taking steps to mitigate its China exposure.
Victoria’s Secret Owner Soars 15% as Beauty Chain Boosts Sales

Market Reaction

  • The shares rose as much as 15% in after-hours trading. They had slumped 16% this year through Wednesday’s close.

--With assistance from Connor Corvino.

To contact the reporter on this story: Jordyn Holman in New York at jholman19@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder

©2019 Bloomberg L.P.