L Brands, parent of Victoria’s Secret, Pink, La Senza and Bath & Body Works, has reported a drop in sales and earnings for the second quarter.
Teen-focused diffusion-brand Pink, now a US$3 billion business which achieved $12 billion in sales last year, is suffering from decline in its core US market, where it seems exposed to rival brands like American Eagle’s Aerie and the Adore Me and ThirdLove.
The company confirmed in an earnings call that Pink’s same-store sales declined by a vague mid-single digits during the quarter to August 4, adding to challenges the company has with its flagship Victoria’s Secret brand, where same-store sales declined 1 per cent. Bath & Body Works restored some respectability to the company’s figures, with sales up 10 per cent.
Pink CEO Denise Landman announced her retirement after the results were released, and will be replaced on October 1 by Bath & Body Works president for merchandising and product development, Amy Hauk.
L Brands executives deny that Pink is losing touch with its customers.
“I do not think nor do I think anyone in this room believes that Pink has lost its ability to connect with customers and drive excitement in our core constituency,” said Landman during an earnings call.
L Brands’ reported net sales of US$2.984 billion for the quarter to August, down from $2.755 billion in the same period last year. The group’s comparable sales increased by 3 per cent overall. Second-quarter operating income was $228.1 million compared to $300.9 million last year, and net income was $99 million compared to $138.9 million last year.
After blaming Pink for reducing the company’s full-year earnings guidance, management watched as L Brands’ share price fell to its lowest point since 2011.
Addressing her retirement, Landman said she felt “incredibly fortunate” to have been part of the brand since its inception and for her nearly 20 years with L Brands.
“It’s been a privilege to lead and be surrounded by such incredible talent, thinking and creativity. It inspires me every day. I have great respect for Amy and know that I will be leaving the business in good hands.”
Leslie H Wexner, chairman and CEO of L Brands, said: “Denise has always been a curious student of the business, focused on the customer and driven by her entrepreneurial spirit. Her contagious passion for the brand has built a true “Pink Nation” experience among college-age women and created one of the fastest growing specialty retailers of all time.
“Amy too is a master merchant with deep knowledge and capabilities. She is well-equipped to lead the Pink team.
She has a track record of accurately identifying what’s next in the market, is curious and action oriented. She leads with pace and energy. Since joining Bath & Body Works 10 years ago, she has built a solid, talented merchant team which is well prepared to continue the momentum in the business.”
L Brands operates 3076 company-owned specialty stores in the US, Canada, the UK and greater China, and its brands are sold in more than 800 additional franchised locations worldwide.
