Dive Brief:
-
Victoria’s Secret and Bath & Body Works parent company L Brands reported Q2 earnings of $252.4 million compared to $202.5 million a year ago, while revenue increased to $2.89 billion from $2.77 billion over last year. Analysts cited by Thomson Reuters had estimated $2.86 billion in revenue for the quarter.
-
L Brands' Q2 same-store sales rose 3%, slightly down from a 4% increase a year ago but in line with analyst expectations.
-
The company provided mixed guidance going forward: For the year, the retailer expects between $3.70 per share and $3.85 per share in adjusted earnings, up from its previous range of between $3.60 and $3.80 per share and above the $3.73 forecast by Wall Street. But the company held back for the third quarter, saying profit would likely fall between 40 cents per share to 45 cents, below analyst estimates of 47 cents per share.
Dive Insight:
When L Brands tapped former Spanx CEO and Nike executive Jan Singer to lead Victoria's Secret after longtime CEO Sharen Turney abruptly left in February, the company appeared to be faltering.
When Turney left, many wondered what would be next for the brand. Turney's tenure at Victoria's Secret was impressive: Since 2006, its sales increased by more than 70% to reach $7.7 billion. Turney was widely viewed as a possible successor to Les Wexner, the L Brands CEO who turns 79 later this year.
After Turney's departure, Wexner took over the helm to right the ship. Victoria's Secret surprised many when it announced a massive organizational restructuring in May which saw the brand cut 200 jobs, end its swimwear and direct channel apparel sales to focus more on "core categories," and halt production of its print catalog. Those core categories include its signature bras and panties, as well as the sport category, which sells sport bras, leggings and sweats.
Incoming CEO Singer will report to Wexner when she starts her new role next month. Singer will inherit a massive business, with Victoria's Secret controlling a roughly 60% share of the U.S. lingerie market. The flagship brand remains L Brands' biggest moneymaker, pulling in almost two-thirds of the retailer's revenue.
Wexner's efforts appear to have paid off—at least for now. While this quarter's earnings results were largely positive, the brand still faces headwinds from increased competition: The athleisure trend is gradually expanding into underwear, while upstart brands aim to strike a contrast with the leading U.S. lingerie brand. Lane Bryant has run an "I'm no Angel" campaign with plus-size models, while American Eagle Outfitters' Aerie brand has eschewed the use of Photoshop in its marketing materials.