L Brands Names John Mehas as CEO of Victoria's Secret Lingerie -- Update
20 November 2018 - 9:56AM
Dow Jones News
By Khadeeja Safdar and Maria Armental
L Brands Inc., trying to revamp business at its flagship
Victoria's Secret chain, on Monday said it is halving its annual
dividend and hiring a Tory Burch executive to lead the lingerie
division.
The retailer, which is on track to report its third consecutive
annual profit decline, said it plans to cut its annual payout to
$1.20 a share, starting with the March payout. The move will save
about $325 million in cash.
The company said John Mehas will be joining Victoria's Secret
early next year to succeed Jan Singer, who resigned last week. Mr.
Mehas currently serves as president of Tory Burch and previously
led Club Monaco.
In an earnings commentary, the company attributed the weak
performance at Victoria's Secret to a "poor assortment" and at its
PINK brand to "fashion errors in loungewear." Customers are
responding better to new bras and sleepwear at Victoria's Secret,
the company said.
Comparable sales at Victoria's Secret, which include digital and
same-store sales, fell 2% in the third quarter. Still, that was
better than analysts' projected 2.3% decline, according to FactSet
data.
The unit accounted for $1.53 billion of L Brands's total
quarterly sales of $2.77 billion. Much of the rest comes from Bath
& Body Works, whose sales have fared better. In the third
quarter, Bath & Body Works comparable sales rose 13% from a
year ago.
For 2018, the company said square footage at Victoria's Secret
in North America will decline about 1% and increase about 3% at
Bath & Body Works, yielding a total company increase of about
1%.
Victoria's Secret has generated years of growth with images of
busty supermodels and padded bras retailing at prices topping $50,
but new competitors have moved into the category with alternative
styles and messages. Many of them are gaining traction by
emphasizing more sizing options and advertising that includes
different body types.
L Brands's founder, longtime chairman and chief executive,
Leslie Wexner, took charge of Victoria's Secret more than two years
ago and made big moves. He changed leadership, shifted away from
catalog mailings, exited the swimsuit business and doubled down on
sports bras to address the rise of the so-called athleisure
trend.
Despite the changes, Victoria's Secret remains married to its
traditional sex-infused marketing and continues to emphasize its
store fleet, largely in malls across the country. In an interview
last year with The Wall Street Journal, Mr. Wexner defended his
focus on malls.
Since Victoria's Secret has continued to struggle, Mr. Wexner
has been pruning his portfolio of brands, announcing plans to close
the Henri Bendel handbag business after the holidays and explore
strategic alternatives for intimate-apparel chain La Senza.
Overall, for the 13 weeks ended Nov. 3, L Brands reported a loss
of $42.8 million, or 16 cents a share, compared with a year earlier
profit of $86 million, or 30 cents a share.
The company took an $80.9 million charge related to the
impairment of some Victoria Secrets stores and a $20.3 million
charge related to Henri Bendel's closing. Excluding these items, L
Brands said it had an adjusted profit of 16 cents a share.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com and Maria
Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
November 19, 2018 17:41 ET (22:41 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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