L Brands shares tumbled on Tuesday after the company announced weak sales in its Victoria’s Secret stores for last month.

The stock dropped nearly 10 percent and was on track for its worst day since March 1, when it fell 13.9 percent. L Brands said same-store sales for Victoria’s Secret — a key measure followed by retailers — fell 1 percent in June despite an extended semi-annual sale.

L Brands’ Chief Investor Relations Officer Amie Preston said in a conference call that a soft-start in lingerie and PINK sales weighed on the promotion during the past five weeks.

“The semi-annual sale had a soft-start with negative traffic levels,” Preston said. “In response, we extended the sale time period versus last year by two weeks and reduced pricing to drive traffic and clear inventory, which resulted in merchandise margin rates down significantly to last year.”

The June semi-annual sale at Victoria’s Secret tends to drive sales up, according to analysts at Jefferies. “The company admitted traffic was soft so the sale was extended and prices reduced further. We believe this all means the brand is broken,” said analyst Randal Konik.

Konik also said in a note that competition from American Eagle’s lingerie brand Aerie has taken a bite out of Victoria’s Secret and PINK’s market share. As a result, the analysts recommended investors sell L Brands stock. Konik has an underperform rating on L Brands and a price target of $23 per share, implying a 37.4 percent decline.

The company has been struggling mightily this year, with its stock falling more than 40 percent in 2018.

L Brands also reported on Thursday net sales increased 6 percent to $1.282 billion for the five weeks leading up to July 7 compared with net sales of $1.213 billion for same period in 2017. Comparable sales for the period increased 3 percent compared with the same five weeks in 2017, supported by a 10 percent increase in Bath and Body Works comparable sales.

Source: Investment Cnbc
L Brands tumbles after weak sales at 'broken' brand Victoria's Secret