Disappointing results for the fourth quarter of its fiscal year has led L Brands Inc. (NYSE: LB) to the decision to close 4 percent of its Victoria’s Secret stores. The company is planning to close 53 of the stores during the coming year, up from 30 stores last year and an average of 15 stores annually in prior years. The company currently has 1,143 Victoria’s Secret stores worldwide, with more than 950 stores of those stores in the United States.
The decision comes as L Brands reports weak results for the quarter. According to the company’s earnings report, fiscal fourth-quarter net income was $540 million, or $1.94 per share, down from $664 million, or $2.33 per share a year earlier. After adjustments, L Brands earned $2.14 per share, higher than the $2.07 per share expected by analysts.
The company reported fourth quarter revenue of $4.85 billion, lower than expectations of $4.88 billion. Sales at stores open at least a year fell 3 percent in the quarter. The results were hampered by the performance of Victoria’s Secret, where same-store sales fell 7 percent from the same quarter the previous year.
Victoria’s Secret has struggled in recent years as competitors have eaten farther into its share of the $7.2 billion bra market. Consumers have been moving away from the sexy bras Victoria’s Secret is known for towards more comfortable bra styles. The brand relied on heavy promotions during the holidays to draw customers to its stores.
L Brands has already pulled back on investing in new and remodeled Victoria’s Secret stores. On the latest earnings call, Stuart Burgdoerfer, the company’s executive vice president and chief financial officer, said the need to close stores was “based on the overall performance of the Victoria’s Secret business, not meeting our expectations or having year-on-year declines.” A list of the closing stores was not released.