Victoria's Secret Slumps Again as Bath & Body Works Keeps Growing

COLUMBUS, United States — L Brands Inc. — in need of a win after long-time leader Les Wexner has come under fire for his close ties to disgraced financier Jeffrey Epstein — gave investors mixed news Wednesday as profit beat estimates in the latest quarter but Victoria's Secret continues to struggle.

At Victoria’s Secret, same-store sales fell 6 percent last quarter, missing analysts’ estimates. Comparable sales for Bath & Body Works — recently the company’s bright spot — rose 8 percent, outpacing expectations. For the third quarter, it’s expecting earnings per share of between negative and positive 5 cents a share, below the average analyst estimate.

Key Insights

Since July, the scandal surrounding Epstein has cast a shadow on Victoria's Secret owner Wexner. Wexner has said Epstein, who was his former money manager, had "misappropriated vast sums of money" from him and his family. Investors interested in asking more have to wait for the company's quarterly earnings call, which is expected on Thursday at 9 a.m.

L Brands' beauty and skincare chain stands in stark contrast to its Victoria's Secret unit, which has struggled to gain footing amid changing consumer demands and a move away from its overly sexy aesthetic. Recently, the company has shown a willingness to change. It hired its first openly transgender model and in May it said it would change the way it does it annual fashion show. Additionally, Ed Razek, the lingerie company's controversial chief marketing officer, said he would resign this month. Still, change is slow, the results show.

While retailers have signalled the uncertainty from tariffs could impact its business as they head into the critical holiday season, L Brands may be a bit more insulated. In May it said the majority of its products from Victoria’s Secret Beauty and Bath & Body Works are sourced in the US Again, investors wanting more information will have to wait.

Market Reaction

The shares swung between gains and losses in late trading Wednesday. They were down 21 percent year to date through Wednesday’s close.

By Jordyn Holman; editor: Anne Riley Moffat.