Victoria's Secret Parent Firm Sees Shares Tumble As Sales Continue To Drop

L Brand Stock Prices
Victoria's Secret model Alessandra Ambrosio of Brazil (C) walks through the Coachella Valley Music and Arts Festival (Photo: Reuters / Lucy Nicholson)

L Brands, the parent company of the popular Victoria's Secret lingerie brand, saw its stocks tumble to a near 10-year low following the release of its disappointing second-quarter earnings.

The company released its report on Wednesday, which was then followed by a market reaction the day after that sent its stocks down by as much as 12 percent.

The Ohio-based company stocks briefly touched $17.61 per share during the trading day, a figure the company has not seen since 2009. The stock was able to slightly recovering during midday trading, finally closing at a 9 percent drop. So far, the firm's stocks have dropped by around 42 percent since the start of the year.

The company, which also owns different brands such as Bath & Body Works and Lane Bryant, reported a 1 percent fall in its same-store sales for its fiscal second quarter. The figure failed to meet analysts' expectation of a 0.3 percent increase in same-store sales.

A 6 percent drop in same-store sales for its Victoria's Secret subsidiary contributed to the overall drop, while an 8 percent increase in same-store sales for Bath & Body Works managed to somewhat soften the loss. The Victoria's Secret sales decrease failed to meet analysts' expectations of a 3.9 percent drop in same-store sales.

During the company's earnings call, executives had assured shareholders that they were in the process of rolling out new marketing strategies and a number of new merchandise ahead of the holidays. The move is aimed at helping the ailing figures reported by its Victoria's Secret business unit.

According to the firm's chief financial officer, Stuart Burgdoerfer, consumer reaction to the company's new merchandise lineup remains to be very positive. The rollout of new products ahead of the holiday season is expected to balance the weak performance of its lingerie business.

Executives elaborated that the issues with its Victoria's Secret business are mainly product-related, which is why they are now planning different strategies to fix the issue.

One of L Brand's strategies to fix the issue was the removal of Victoria's Secret chief marketing officer, Edward Razek. Earlier in the month, L Brand issued a memo that informed employees of its plans to remove the executive. Razek voluntarily resigned after his sexier image for the brand had failed to revive its sales numbers.

Victoria's Secret is also now slowly moving away from its over-the-top sexy image, as evident in its decision to halt its annual fashion show. The company also recently signed its first openly transgender model in an effort to appeal to a much wider audience.

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