Denise Landman, CEO of Victoria’s Secret's PINK brand, will retire at the end of the year after nearly 20 years at L Brands, the company said Wednesday. Amy Hauk, Bath & Body Works president for merchandising and product development, will replace her. Hauk joined Bath & Body Works in 2008 and has previously held senior merchant positions at The Children’s Place, The Disney Store, Gap Inc. and Macy’s.
Victoria's Secret parent L Brands also on Wednesday reported that second quarter net sales rose to $2.98 billion from $2.76 billion in the year-ago quarter as total company comparable sales rose 3% year over year. Operating income in the quarter fell to $228.1 million from $300.9 million last year, and net income fell to $99 million from $138.9 million last year, according to a company press release.
Comp sales (including e-commerce and stores) at Victoria’s Secret fell 1% after falling 14% a year ago and at Bath & Body Works rose 10%. In stores only, comps at Victoria’s Secret fell 5% and at Bath & Body Works rose 7%, the company said. The company lowered its guidance for 2018 full-year earnings to between $2.45 and $2.70 per share, down from its previous forecast for between $2.70 and $3.00, and said it expects third quarter earnings between zero and 5 cents per share.
L Brands executives said they're not satisfied with the results from Victoria's Secret, the company's flagship brand.
After a few quarters of declines, it's easy to see why. Despite continued robust sales (the brand logged a whopping $1.72 billion in total sales in the second quarter alone), Victoria's Secret continues to cede share to more up-to-date brands like American Eagle's Aerie and online upstarts like ThirdLove and Lively. Its PINK sub-brand, aimed at younger shoppers, is faring better, but remains small and is offered at lower price points.
The bad news in the second quarter is that even PINK showed declines in store traffic and sales of some merchandise. Poor sales of fleece loungewear in particular hurt in the quarter, Landman said in a conference call Thursday morning, pegging that on an increasing tendency of shoppers to buy in season rather than ahead of season.
"While weaker PINK performance is disappointing, we believe management is taking steps to correct lounge performance as well as improve performance in lingerie," B. Riley FBR analysts said in comments emailed to Retail Dive, adding that they consider PINK "still a work in progress."
The company's beauty and personal product-focused Bath & Body Works is a different story, posting healthy comp growth. Still, even that brand is challenged by growth in e-commerce, which spiked more than 30% in the quarter but suffers lower merchandise margins.