L Brands shares were trading down 6 percent Thursday after saying it had plans to close roughly 53 Victoria’s Secret stores in 2019, as the lingerie retailer continues to lose steam against newer rivals.
L Brands, which also owns Bath & Body Works, on Wednesday reported on Wednesday mixed results in the holiday quarter. The weakest part of its business continues to be Victoria’s Secret, where same-store sales 3 percent.
The brand, which was once known for its sexy bras, has lost out as women have switched to more comfortable bra styles and brands that seem more inclusive from the likes of American Eagle‘s Aerie, Third Love, Lively and Adore Me. The $7.2 billion bra category is also seeing new competition from Target, which this spring plans to launch three new lines of lingerie and sleepwear.
Millennials, which comprise more than a third of the women’s intimate apparel market, spent a third of its bra dollars in 2018 on sports bras, according to retail trade group the NPD Group.
Victoria’s Secret, which has 1,143 stores worldwide, typically closes roughly 15 stores per year. L Brands’ CFO Stuart Burgdoerfer told analysts in November the company is going to “take a hard look” at its real estate “over the next several months.
Bath & Body Works, meantime, continues to perform strongly. The fragrance and personal care shop grew same-store sales by 12 percent.
Dragged down by the weakness at Victoria’s Secret, L Brands same-store sales fell 3 percent in the latest period.
L Brands reported fiscal fourth-quarter net income of $540 million, or $1.94 per share, down from $664 million, or $2.33 per share a year earlier. Excluding items, L Brands earned $2.14 per share, beating the the $2.07 per share expected by analysts surveyed by Refinitiv.
Net sales rose to $4.85 billion, missing expectations of $4.88 billion.
L Brands said it expects earnings for 2019 will fall between $2.20 and $2.60 a share. That includes break-even earnings per share result in its first quarter.