Victoria’s Secret is showing more signs of weakness.
L Brands, the parent company to the lingerie brand, announced that it was closing 53 stores in North America this year, up from 30 store closures in 2018.
“Our store closure plans are heightened in 2018 and we’ve pulled back on investing in new stores and the remodeling of stores substantially over the last several years,” Stuart Burgdoerfer, chief financial officer of L Brands, told investors during the conference call. “But truly everything is on the table.
“We did a deep review of all of our real estate in the fourth quarter, which solidified and gave rise to our plans about capital activity, spending activity in 2019 and again a more active closure plan for 2019 than we had seen in prior years,” Burgdoerfer continued.
He emphasized that the company closes stores every year.
“That’s an ongoing part of running the business,” Burgdoerfer said.
In fact, historically the company has closed about 15 stores per year. Bigger picture, Victoria’s Secret opened 820 stores, closed 673 stores and sold 130 stores over the last 10 years. The 53 store closures recently announced make up about 4 percent of the company’s 1,170 stores.
The executive said Victoria’s Secret have “no constraints. We are not financially constrained,” and for now the company has “a heightened focus on the customer and our merchandise assortments.”
In addition, Burgdoerfer pointed out that Victoria’s Secret has “a good, strong, store-based growth for the international business in total,” although also admitted it is moderating growth in China’s rapidly expanding economy and not opening any new stores in the UK.
“The opportunity is to drive more sales through the existing store footprint that we have,” he said.
But the news did little to tame investor fears. Shares of L Brand fell nearly 8 percent Thursday.
The store closure come on the tail of another unsatisfactory earnings report Wednesday evening. L Brands fell short on bottom-line profits and lowered its full 2019 guidance, leaving investors wondering just how long Victoria’s Secret’s comeback will take.
Even so, Burgdoerfer said the turnaround won’t happen over night. He pointed out that John Mehas has been in the c-suite of the lingerie brand for only a few weeks. Amy Hauk took over at Pink last October.
“Everything has a life cycle,” he said during the conference call. “And as one gets later in life cycles, you’ve got to innovate and update and create differentiation. And we’ve gotten a bit behind on that in some of these core bra franchises. And you can be sure that John and the team there are intensely focused on that very question and that big opportunity, frankly, and that’s going to be a big — is a big priority as we move through 2019.”