Shares of L Brands (NYSE: LB), the parent company of Victoria’s Secret and Bath & Body Works, fell nearly 10 percent to $35.24 on Thursday after the company lowered its guidance for the year.
Despite reporting second quarter earnings on Wednesday of 48 cents per share and revenue of $2.76 billion, which beat analysts’ expectations of 44 cents per share and $2.75 billion, the retailer noted that the same-store sales had declined by 8 percent.
L Brands said that these results did not meet expectations and reduced its full-year guidance to between $3 and $3.20 per share from between $3.10 and $3.40 per share. The company issued third quarter estimates between 25 cents and 30 cents per share, which were below expectations of 36 cents a share.
Victoria's Secret continued to struggle this quarter as it is still feeling the effects of its decision to stop selling swimwear and apparel. Comparable sales decreased 14 percent. They increased 2 percent in the same period time last year. L Brands said the exit negatively affected its comparable sales by 6 percentage points and Victoria's Secret's comparable sales by 9 percentage points.
Bath & Body Works performed well, but investors should remain skeptical given it's one of the last mall-based concepts to see its top line "slip into negative territory," says Wells Fargo analyst Ike Boruchow, who slashed his price target for the retailer to $45 per share from $50.
L Brands stock is down nearly 47 percent since the start of the year.