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L Brands lowers its earnings forecast

The parent brand behind Victoria’s secret cuts its profit outlook as its stock falls

This news managed to overshadow the overall quarterly earnings and revenue that was above expectations, according to analysts.

The company stated that it now expects full-year earnings per share between $2.45 and $2.70. Which is down from its previous forecast for earnings per share between $2.70 and $3.00.

L Brands stated that for the third quarter, it expected its earnings per share between 0 cents and 5 cents. Thomson Reuters polled a series of analysts, who estimated their third-quarter earnings per share of 16 cents.

Shares of the company fell 5 % in after-hours trade. Based on the Thomson Reuters survey, the company earnings had variance with what Wall Street was expecting. The earnings per share was 36 cents, when adjusted vs an expected value of 34 cents . The overall revenue was $2.98 bn , vs an expected revenue of $2.93 bn.

Comparable sales at Victoria’s Secret declined 1% in the second quarter, while they grew 10 percent for Bath & Body Works—also under L Brands. On a whole, comparable sales grew 3 %.

The long-established lingerie player has struggled under the pressure of new competition from millennial-focused brands like American Eagle’s Aeri division, Adore Me and ThirdLove. Those brands have the products that experts say, are better geared towards today’s consumer.

“The dark store environment, the conspicuous sexuality of the offer, and the brash marketing are increasingly out of step with what modern consumers want,” stated GlobalData Retail managing director Neil Saunders.

In July, Victoria’s Secret sent its stocks tumbling when it announced that weak sales during semi-annual sale forced it to extend the event by two weeks and offer steeper discounts to customers.

“We believe this all means the brand is broken,” wrote Jefferies analyst Randal Konik at the time.

L Brands have also declared that Denise Landman, chief executive of Victoria’s Secret Pink brand, will retire at the end of the year. Amy Hauk, an executive at Bath & Body Works, will be replacing Landman as the CEO of Pink.

-GBO Correspondent

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