L Brands Inc. reported on Thursday that net sales in June fell 6% to $1.213 billion, compared to net sales of $1.296 billion for the five weeks ended July 2, 2016.
Same-store sales in the five weeks ended July 1 fell 9% as the company’s exit from swim and apparel categories at Victoria’s Secret took a toll and had a negative impact of some 7 percentage points to overall same-store sales and 10 percentage points to Victoria’s Secret’s same-store sales, according to a company press release. Retail Metrics had expected a 6.9% decline.
The company also reported that net sales for the 22 weeks ended July 1 fell 6% to $4.424 billion, compared to net sales of $4.727 billion in the year-ago period. Same-store sales during that time fell 9%.
Shares in L Brands fell on the news of worse-than-expected sales declines in June, but the company is in the midst of a turnaround. The exit from swimwear and other apparel at Victoria’s Secret is an attempt to streamline the company and focus on its strengths, but delivered an unsurprising short-term hit.
The category reductions — which followed the appointment of former Spanx CEO and Nike executive Jan Singer to the lead role at Victoria's Secret — were an effort to refocus L Brands on three areas that would most appeal to millennial shoppers: beauty, bras and the Pink youth-oriented brand. Executives said in February that L Brands would focus on its investment in China, in real estate for Victoria’s Secret and Bath & Body Works, and on growth in the sports bra and bralette business.
The challenge there is that bralettes sell at lower price points than the brand’s iconic push up bras — and therefore generate fewer profits for a company looking to pump up earnings. All told, the company's moves have meant 200 jobs cut so far.
While any mall-based retailer remains vulnerable in a year defined by declining traffic, store closures and retailers going bankrupt, L Brands’ increased guidance released in May suggests it may be in a position to bounce back from recent struggles.