Columbus, OH
www.lb.com

Corporate Sales:

$12.6 billion

Beauty Sales:

$4.6 billion (est.)

Key Personnel:

Les Wexner, chairman, president and chief executive officer; Nicholas P. M. Coe, president and chief executive officer, Bath & Body Works; Charles C. McGuigan, chief operating officer, L Brands, Inc.; Martin Waters, president and chief executive officer, L Brands International.

Major Products/Brands:

Bath & Body Works, White Barn home fragrances; Victoria’s Secret fine fragrances and cosmetics.

New Products:

Bath & Body Works: White Gardenia candle, Lavender Sandalwood body lotion; Victoria’s Secret Beauty: Lip Crayons, Love, Scandalous Dare and Secret Crush fragrances.

Comments:

In light of decreased foot traffic in the malls that are home to many of L Brands’ Bath & Body Works, Victoria’s Secret and White Barn storefronts, the company continues to refine and streamline its business models to make the most of its brand cache.

In 2016, the company expanded its Victoria’s Secret and PINK stores in the U.S., Canada, and U.K. and company-owned Bath & Body Works stores in the U.S. and Canada, grew its direct businesses sales by 6%, and continued the process of expanding Bath & Body Works and Victoria’s Secret stores and Victoria’s Secret Beauty and Accessories stores with partners throughout the world. It sunk $772 million of its $990 million in 2016 capital expenditures into opening new stores and remodeling and improving existing ones.

Bath & Body Works’ 2016 net sales increased $265 million to $3.9 billion, with comparable sales increasing 6% and comparable store sales increasing 3%. The biggest contributors were home fragrance and Signature Collection. The B&BW division added 240 new concept stores, which included White Barn home fragrance.

On the Victoria’s Secret side, L Brands reorganized the entity into three separate business components (Victoria’s Secret Lingerie, Pink and Victoria’s Secret Beauty), phasing out swimwear as part of an effort to refocus and expand the brand around the world, especially in North America. To that end, L Brands snapped up 26 Victoria’s Secret Beauty and Accessories stores from its partner in Greater China, and opened five new stores in the region. In 2016, net sales increased $38 million to $423 million, which the company said primarily related to those newly acquired stores in Greater China.

Meanwhile, L Brands’ retail partners opened 44 Victoria’s Secret Beauty and Accessories stores, bringing the total to 391. The company plans to open an additional 45 to 60 Victoria’s Secret Beauty and Accessories stores in 2017.

News of Note in 2017

L Brands engaged in a lot of shuffling in 2016 to strategically improve the company’s long-term fiscal optimism. Despite total  Victoria’s Secret Q1 2017 sales declining 12% to $1.5 billion (attributed to double-digit lagging lingerie sales), total sales for Bath & Body Works jumped 3% to $678 million, with a 2% rise in comparable sales, driven by the company’s home fragrance products. Victoria’s Secret and Bath & Body Works International’s sales were up 9% to $103.3 million. Other revenues increased 4% to $122.2 million. The company believed its ongoing refocusing efforts positioned it for projected double-digit growth, but analysts weren’t so certain.

Sure enough, in August during the company’s 2017 Q2 earnings call, the results indeed fell below those lofty expectations. Although B&BW continued to perform well, the company said Victoria’s Secret and Victoria’s Secret Direct—which account for nearly 80% of the company’s valuation—continued to reel from apparel and swimsuit revenue losses, with revenue for the quarter down 4.5% to $2.76 billion (compared to $2.89 billion last year).