The struggles of L Brands began long before the coronavirus hit the U.S. and the specialty retailer is trying to cover its hefty debt load which has prompted the closure of 300 stores this year. The majority of those closures will be under the Victoria Secret and Pink banners which comprise about one-quarter of its 1,070 stores in North America.
The more successful banner Bath & Body Works will also close 50 of its stores or 3% of its locations.
L Brands’ deal to sell a 55% stake of the business to private equity firm Sycamore Partners to raise $525 million in February was terminated earlier this month. The company has also considered the option to spin Victoria’s Secret off as a stand-alone company.
Jan Kniffen, a retail consultant with J Rogers Kniffen, said this is a huge problem, having one performing asset in Bath & Body Works and one beleaguered asset in Victoria’s Secret. He said the chain will have to downsize to survive.
For the quarter ended May 4, 2020, L Brands’ total sales fell 37% to $1.65 billion. Victoria’s Secret’s same-store sales were down 13%. Bath & Body Works’ same-store sales jumped 41%, which the company credited partially to sales of sanitizer and soaps amid the pandemic.
The company reported a loss per share of $1.07 for the first quarter compared to earnings per share of 14 cents last year. First-quarter operating loss was $317.7 million compared to operating income of $153.3 million last year, and net loss was $296.9 million compared to net income of $40.3 million last year.
“We would expect to have a meaningful number of additional store closures beyond the 250 that we’re pursuing this year … meaning there will be more in 2021 and probably a bit more in 2022,” Stuart Burgdoerfer, interim CEO of Victoria’s Secret, said on the earnings call with analysts Thursday.