Victoria's Secret models Alessandra Ambrosio and Adriana Lima (R) walk the runway during finale of the 2014 Victoria's Secret Fashion Show at Earl's Court exhibition centre on December 2, 2014 in London, England.
Photograph by Dimitrios Kambouris—Getty Images for Victoria's Secr
By Phil Wahba
November 1, 2016

L Brands (lb) shares are taking another beating as sales in its flagship brand Victoria’s Secret continue to falter.

The apparel maker and retailer, whose other brands include Bath & Body Works and La Senza, saw shares fall 8% on Tuesday morning after L Brands reported comparable sales at Victoria’s Secret fell about 2% in October. L Brands’ shares were already down some 25% so far this year before the latest news.

L Brands’ inability to restructure and get Victoria’s Secret, which generates nearly 70% of company revenues, back on track in the face of rising competition from many quarters, including American Eagle Outfitters’ (ago) popular Aerie brand, is weighing on investor confidence.

Earlier this year, star executive Sharen Turney resigned as the brand’s CEO, and Victoria’s Secret dropped some categories like swimwear. At the time, L Brands warned investors that results would be bumpy until it found its legs again. The October decline was the first for the brand since May, suggesting its turnaround is not taking hold. And the mall-based retailer is dealing with drops in shopper traffic at many malls as well as a tough environment for many clothing chains.

Turney, who took the helm in 2006, helped turn Victoria’s Secret into a cultural touchstone. The brand, though far from a high-end name, is part of pop culture thanks to an annual lingerie show that is broadcast on national television and attracts some of the biggest names in pop, including Taylor Swift and Nicki Minaj. On Turney’s watch, Victoria’s Secret’s annual rose to nearly $8 billion in the fiscal year that ended last month.

 

Adding to investor worries, L Brands said its third-quarter profit would be 40 cents per share, at the low end of its prior estimate of between 40 cents and 45 cents per share, and well below the 55 cents it reported in the year earlier quarter. One consolation for the company was a 6% comparable sales increase at Bath & Body Works.

All that suggests how much work Victoria’s Secret has yet to do to win back investor love for L Brands.

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