For the first half of the year L Brands’ revenue fell 1.4 per cent. The group is the owner of brands like Victoria’s Secret. This brand’s revenue fell six per cent. But another brand, Bath & Body Works, saw revenues rise by ten per cent.
L Brands, based in the US, has a total of 2,927 stores. In the second quarter of the year there were 36 store openings and 52 closures. Most of the closures were of Victoria’s Secret stores. There are a total of 37 Victoria’s Secret stores in the United States. As for stores managed by third parties, L Brand had at the end of the first half 687 stores. During the last quarter, the company opened 36 new stores under this model and closed other 23.
L Brands’ gross margin has been contracting year over year for the past few quarters. For fiscal 2019, its gross margin rate is likely to decrease year over year, mainly due to lower merchandise margins. Also, SG&A costs are expected to increase year over year, stemming from higher wage rate and inflation-related pressure. Further, L Brands’ balance sheet doesn't look healthy, owing to a high debt level. Victoria’s Secret was once known as the success formula for mass-market lingerie in the United States.