Even as L Brands is looking to turnaround its Victoria’s Secret lingerie brand, it has a new headache on its hands: its teen counterpart, Pink.
The owner of Victoria’s Secret, Pink and Bath & Body Works said Wednesday night it is reducing its full-year earnings guidance, due to weakness in its Pink brand.
Growth in sales at comparable stores for the teen-focused label declined by single-to-mid digits in the second quarter, company executives told analysts Thursday morning. On Wednesday evening, the company announced the retirement of Pink CEO, Denise Landman. Amy Hauk, president for merchandising and product development of Bath & Body Works, will replace Landman on Oct 1.
Executives said L Brands now expects to earn $2.45 to $2.70 a share in 2018, down from a previous forecast of $2.70 to $3.00 a share. For the third quarter, it now expects earnings between $0.00 and $0.05 a share.
Shares of L Brands were down more than 10 percent Thursday to $28.66 a share, trading at lows not seen since 2011.
Victoria’s Secret’s Pink sells bras, panties and lounge-wear like leggings and fleece. Its struggles come as Victoria’s Secret has had its own challenges to move beyond the sexy lingerie for which it has become known, to today’s preferred comfortable styles.
Those stumbles have opened up opportunities for competitors, including millennial-focused brands like American Eagle‘s Aerie division, Adore Me and ThirdLove.
Victoria’s Secret offset some of the decline at Pink. Their combined comparable store sales fell by 1 percent in the second quarter from the same period last year. A 10 percent jump in same-store sales at its Bath & Body Works business helped lessen the pain. Overall, the company sold 3 percent more goods at stores open for at least a year.
Executives Thursday pushed back against the idea that Pink has lost in touch with its shoppers as analysts have accused Victoria’s Secret.
“I do not think nor do I think anyone in this room believes that PINK has lost its ability to connect with customers and drive excitement in our core constituency,” Landman said.
Though light on details regarding a turnaround plan for Pink, executives blamed some of the challenges on its fleece top business. Executives said shoppers were delaying buying collegiate style fleeces until cooler weather, reflecting a newer “buy now, wear now” mindset that has infiltrated the industry.
Some analysts Thursday were skepitcal whether Pink could turn itself around under new leadership.
“Changing leadership at Pink … won’t do anything as the brand is not wanted any longer,” wrote analysts at Jefferies.
Pink is nearly $3 billion brand for a company that last year generated roughly $12 billion in sales.
Columbus, Ohio-based L Brands reported fiscal second-quarter net income of $99 million, or 36 cents per share, down from $138.9 million, or 48 cents per share a year earlier. It was better than the 34 cents per share expected by analysts surveyed by Thomson Reuters.
The company earlier this month reported net sales of $2.98 billion for second quarter, up from $2.76 billion the same period a year prior.