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Finance: Victoria’s Secret is ‘clearly breaking’ as PINK sales fall for the first time
PublishedBy: in Business Insider/FinanceApril 12, 2018

Model Jessica Hart at Victoria Secret Soho in New York City.

Sales of PINK — which accounts for 40% of Victoria's Secret sales — declined in March.

  • Sales of PINK merchandise declined in March for the first time.
  • PINK is now dropping its swimwear line.
  • A failing PINK brand could be devastating to Victoria's Secret.

Victoria's Secret is dropping its PINK swimwear line after it pulled the brand into the red for the first time ever.

Parent company L Brands said Thursday the decline in sales of PINK merchandise was driven mainly by its swimwear line, which the company said it is now "in the process of exiting."

Analysts at Jeffries called the news "concerning." For them, it only adds to a mounting list of reasons of why there is trouble ahead for PINK — and ultimately Victoria's Secret.

"PINK was the growth engine for VS in the past, and we continue to believe shares will decline as this brand continues to deteriorate," they said. Jeffries has a price target of $30 price target for Victoria's Secret parent L Brands. That's 17% below where the stock is currently trading.

The brand, which accounts for 40% of Victoria's Secret sales, has previously been seen as a primary source of success for the company. But decreasing sales and pricing power suggests the PINK era may have come to an end.

Declining prices of panties and bras suggest it may have lost a great deal of strength with customers. Meanwhile, competitors like Aerie are grabbing market share.

And the worst is yet to come, according to the analysts.

"History shows when brands break, there is no real floor for valuation," they added. "And PINK is clearly breaking."

L Brands is down almost 40% this year.

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