Who remembers when retail meant something in America? Year to date, the maker of Victoria’s Secret is down 38% and will sink even lower when it opens for trading today — with the stock set for another 7% drubbing.
Here was their guidance and rationale.
Given co’s below-expectation second quarter sales result, the comp forecast for the third quarter is a more conservative flat to low-single digit decline, versus previous view of up low-single digits. While store traffic, particularly at Victoria’s Secret, has been challenging, co believes a large part of the decline is related to the exit of swim and a pullback in promotional activity versus last year. The online businesses continue to be strong, with 11% growth in go-forward categories at Victoria’s Secret and 16% growth at Bath & Body Works. Stores have high sales productivity and 99% of stores are cash-flow positive. Expect the third quarter gross margin rate to be down to last year, driven by buying and occupancy expense deleverage that will more than offset an increase in the merchandise margin rate.
Analyst take.
TAG notes that While mgmt moderated its EPS guidance for the year, third quarter and full year comp guidance is in line with current market expectations. They believe the co took a more conservative view of the topline potential relative to its original plan due to the comp miss in the second quarter rather (in part due to traffic challenges) rather than as a result of anything it is seeing in the business currently, and the company did not update its August comp guidance (down low- to-mid single digits). In addition, the updated guidance still leaves room for a turn to positive comps in the fourth quarter as compares ease and the headwind of the exit of swim and apparel roll down.
While the process has required investor patience, they continue to see potential for sequential improvement in trends and a turn in the stock as the VS restructuring progresses and new product is introduced at the brand through the back half of the year.
FBR & Co notes the more conservative guide was due to lighter sales in 2Q that could potentially continue into 2H if traffic continues to be weaker (though could improve beyond swim season), but sales should still continue to sequentially improve. While the lowered guide is disappointing, they believe their thesis is playing out as they are seeing improved VS merch margins (better than expected), successful product launches, continued Pink outperformance, and improving VS SSS trends (though a bit slower than expected). They believe LB’s solid brands continue to resonate well with consumers based on our survey work and expect results to continue to improve in 2H; $60 tgt.
LB -6% at five-year low premarket.
I get how Amazon is hurting traditional retailers — but what about this? No one is buying lingerie online, or are they? It amazes me to see how well the market is comporting itself, in spite of all this retail dislocation.
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The kind of breed of women that shop in lingerie shops are dying out in the see of radical feminazies, lgbtqvtyakd…weirdos and gender confused millennial snowflakes. So of course lingerie is down and hardly anybody is buying. Lingerie is for 100% true, feminine, loving, devoted women that were very lucky to be snatched by true, masculine, very straight, 100% testosterone built, patriarchal alpha males, such as myself….and such union is becoming a minority these days, so, yeah, lingerie market down.
Indeud.
Hardly anyone is buying because they don’t have any money. Most of it is going to expensive housing, expensive food, healthcare and college debt service. The balance is spent on “experiences”. What you describe as “radical females” are a very small portion of the population and are not the reason for sales declines.
The million dollar question when looking at retail equities is IMO… are the dividends safe? If so, there will be life-changing, opportunistic trades in these.
All true, except you did not properly define your observation: “The balance is spent on “experiences”. What could be more satisfying “experience” for a straight, patriarchal alpha male than his female clad in silky smooth revealing lingerie dancing her way into his bed all ready to be mounted every which way??? Any thoughts on that….?
Was thinking the same thing but you said it better than I could.