Hey Victoria. This isn't exactly a secret. But nobody seems to be buying your lingerie. And that's a huge problem.
L Brands, the owner of Victoria's Secret, reported that same store sales (stores open at least a year) at the intimate apparel chain fell 2% in April. The company also said it expects first quarter earnings to be at the lower end of its previous forecasts.
Share of L Brands fell 8% Thursday on the news. The stock is now down nearly 50% this year, making it the worst performer in the S&P 500 for 2018.
The biggest problem? Victoria's Secret is facing increased competition from -- you guessed it -- Amazon. The online retail king now sells inexpensive bras, nightgowns and other items under the Arabella brand.
But other retailers are targeting Victoria's Secret too.
American Eagle Outfitters now sells bras and other intimate apparel under the Aerie brand name. Gap has the Love brand as well. And Hanesbrands recently bought Bras N Things, an online retailer with a big presence in Australia and South Africa.
L Brands chief investor relations officer Amie Preston said during a recorded call for investors Thursday morning that a decline in lingerie sales and the Victoria's Secret PINK brand of apparel dragged down overall results.
She added that profit margins at the chain were hurt by "additional promotional activity in order to drive traffic." Translation? Victoria's Secret has had to lower prices and hold more sales in order to get customers to come into the stores.
There is some good news for L Brands though. The company's Bath & Body Works stores continue to post impressive results. Same store sales were up 6% in April.
But the strength at Bath & Body Works isn't enough to move the needle for all of L Brands.
Domestic sales at Bath & Body Works account for less than 30% of the parent company's overall revenue. Victoria's Secret in the US makes up more than 60% of sales. The remainder comes from international stores and smaller subsidiaries.
Wall Street is running out of patience too.
Two-thirds of the analysts that follow the company have either a "hold" or "sell" rating on the stock. Jefferies analyst Randal Konik slashed his price target on L Brands Thursday to $23 a share -- more than 25% below the current price.
Konik is concerned that L Brands has way too much exposure to struggling American malls. Victoria's Secret has nearly 1,200 locations in the US and Canada. He stopped short of saying that closures should be coming...but he was pretty blunt.
"This company has too many stores," Konik wrote in a report.