L Brands cuts its earnings forecast for the fourth quarter following a dry holiday season

on Jan 10, 2020
Updated: Mar 11, 2020
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  • Victoria's Secret parent company, L Brands, saw poor than expected sales in the holiday season.
  • L Brands cut its earnings outlook for the fourth quarter following downbeat sales in the holiday season.
  • L Brands announced a new marketing and advertising strategy to win back its customers from Adore Me and Third Love.
  • American fashion retailer saw a 3% decline in same-store sales in the holiday season.
  • L Brands dropped by around 40% in the stock market in 2019.

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L Brands, the parent company of world-renowned, Victoria’s Secret, announced a slump in its sales during the holiday season. Owing to the worse than expected holiday sales, the company has also cut its forecast for the fourth quarter. The American fashion retailer had previously excited the investors with a statement in September that highlighted an upcoming evolution in its lingerie brand that had remained under pressure in 2019. As per Thursday’s report, however, the so-called evolution couldn’t help the company in terms of its holiday sales.

L Brands Announced A Dramatic Change In Its Marketing And Advertising Strategy

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In order to counter the falling sales, L Brands has recently changed its marketing and advertising strategy dramatically that now adds versatility to its campaigns as the company hired models of all shapes and sizes. The company also highlighted its plans of shifting to products that are more in line with the trend and comfortable for the consumer. With its new strategy, L Brands wishes to win its customers back that are won by its competitors like Adore Me and ThirdLove. The new strategy, however, wasn’t set into motion in time to improve the sales during the holiday season.

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Following the retailer’s announcement, L Brands was seen trading 4% lower in the stock market on Thursday’s premarket trading. In a previous estimate, Victoria’s Secret parent company was expecting to note $2.00 of earnings per share in the fourth quarter. The forecast has now been curtailed to $1.85 per share.

L Brands Posted A Decline Of 3% In Same-Store Sales During The Holiday Season

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In the past two months that ended on January 4th, L Brands recorded its net sales at $3.9 billion. The figure was posted at a much higher $4.1 billion during the same period last year. In terms of same-store sales, the company saw a drop of 3%. As per the data for the holiday season, Victoria’s Secret printed a massive 12% decline in its same-store sales as compared to a much lower 4% decline that was seen in the last year’s holiday season.

L Brands’ performance in the stock market remained largely challenged in 2019. Opening at $26.46 in January 2019, the stock traded below this level for the most part throughout the year. In September, share prices were seen as low as $15.86 that marked an almost 40% yearly decline for the stock. The $5.37 billion company is currently exchanging hands at $19.41.

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