NEW YORK, United States — L Brands Inc. tumbled as much as 10 percent in late trading after disappointing investors with its profit forecast, a sign that the company’s comeback is still a ways off.
Earnings will be 25 cents to 30 cents in the third quarter, the owner of Victoria’s Secret and Bath & Body Works said on Wednesday afternoon. Analysts had been looking for 36 cents on average. Sales at Victoria’s Secret also fell more than projected last quarter.
The outlook underscores the troubles Victoria’s Secret has had connecting with younger customers. Shoppers have been shifting toward cheaper, less-supportive lingerie like bralettes — a category where the company faces competition from American Eagle Outfitters Inc.’s Aerie brand and e-commerce players. On top of that, consumers are skipping trips to the mall, and many are spending more money on travel and technology than apparel.
Same-store sales at Victoria’s Secret plunged 14 percent last quarter, a deeper drop than the 12 percent decline predicted by analysts. The chain’s decision to stop selling swimwear and other apparel categories weighed on results.
Total sales by that measure fell 8 percent, compared with an estimated decline of 7 percent. One bright spot: Bath & Body Works grew faster than expected in the period. Still, that division only accounts for about 30 percent of revenue.
L Brands also cut its annual earnings forecast to $3 to $3.20, compared with an earlier range of as much as $3.40.
The shares fell as low as $35.45 in extended trading. Even before the drop, the stock was down 40 percent this year.
By Lindsey Rupp; Editor: Nick Turner