Victoria’s Secret can’t even sell its merchandise at a discount

Victoria’s Secret had trouble selling merchandise in the month of June, even when it was at a discount.

Same-store sales at the retail chain were down 1% for the month, with increases in the beauty segment offset by declines in lingerie and the Pink brand.

“Semiannual sale had a soft start with negative traffic level,” said Amie Preston, chief investor relations officer for L Brands Inc. LB, -10.69% on the pre-recorded monthly sales call, according to a FactSet transcript. Victoria’s Secret is part of the L Brands portfolio.

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“In response, we extended the sale time period versus last year by about two weeks and reduced pricing to drive traffic and clear inventory, which resulted in merchandise margin rates to [be] down significantly,” the transcript said.

L Brands shares sank 10.4% in Thursday trading after the June sales report.

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According to a Cowen report, June traffic was down 1.1% year-over-year, which was an improvement on May (down 3.5%) and April (down 7.3%).

Victoria’s Secret has had sales challenges over recent quarters, as customers shift their preference to less expensive bralettes, which don’t have padding, as opposed to the higher-priced ‘constructed’ bras, like the Very Sexy line that the brand is known for.

Victoria’s Secret has faced competition from brands like American Eagle Outfitters Inc.’s AEO, -5.35% Aerie brand in the bralette category. And Amazon.com Inc. AMZN, +1.60% which has a growing roster of private labels, is selling low-cost bras.

The company’s exit from the swim category has also been a challenge.

The Pink business, which targets a younger, college-aged consumer had been a bright spot, but seems to be faltering now as well.

Also: Victoria’s Secret runway show is out of step with the #MeToo movement and it’s hurting business

L Brands reported net sales of $1.28 billion for the five weeks ending July 7, 2018 up from $1.21 billion for the five weeks ending July 1, 2017.

Same-store sales at Bath & Body Works were up 10% driven by that brand’s semiannual sale, Preston said.

L Brands shares are down more than 45% for the year so far, while the S&P 500 index SPX, +0.60% is up 4.3% for the period.

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