L Brands Inc. (NYSE: LB), a retailer nearly sunk by falling demand for its products in recent years, made something of a financial recovery last quarter. However, revenue from its iconic lingerie brand, Victoria’s Secret, did not. Apparently, people do not want to buy lingerie, either online or in stores, despite pent-up demand for many other products and services as the COVID-19 pandemic rages.
L Brands posted a revenue increase of 14% in the third quarter to $3.1 billion. It also swung to a net profit of $331 million from a loss of $252 million in the same quarter a year ago
L Brands only did so well because of its Bath & Bodyworks division. Same-store sales rose 56% when store sales and direct sales were included. Store sales for Bed & Bodyworks alone rose by 38%. While Victoria’s Secret’s same-store sales for stores and direct were up 4%, store sales calculated on the same basis cratered by 10%. L Brands offered a qualification: “Stores are excluded from the comparable sales calculation when they have been closed for four consecutive days or more. Therefore, comparable sales results for 2020 exclude periods of time that stores were closed for four consecutive days or more as a result of the COVID-19 pandemic.”
On a financial basis, Victoria’s Secret looked even worse. Its sales dropped 14% to $1.4 billion. When direct sales were backed out, the fall-off was 30% to $755 for stores in the United States and Canada. Bath & Bodyworks did well. Its overall sales rose 55% to $1.7 billion.
L Brands has never offered an adequate explanation for the ongoing disintegration of Victoria’s Secret sales. One observation is that lingerie has gone out of style. Another is Victoria’s Secret’s lingerie is out of style, replaced by more racy brands. However, the Washington Post posited that the decline of malls, overly sexual advertising and the association of L Brands founder Leslie Wexner with sexual offender Jeffrey Epstein destroyed its future. If so, there will never be any turnaround.
The disappearing act of Victoria’s Secret lingerie has not nearly ended.