2-6-18 2:47 AM EST | Email Article

He says problems in the industry are largely limited to clothing chains and department stores -- which he predicted would decline years ago. "Everybody laughed," he recalls when in 1989 at a shopping center conference he pronounced the demise of the department-store model. Mall developers told him, "you're completely crazy."

Efforts in the store are lost on shoppers like Miku Konsolas, who says she has no way of knowing if Victoria's Secret is getting better because she rarely visits stores. The only reason the 28-year-old, a sales engineer in San Francisco, set foot inside a mall in recent memory was to process a quick exchange for an online order. On a website, she can "see all the inventory at once," she says.

In December, store-only sales at Victoria's Secret dropped 6%. Executives say the company's profits were hurt by heavy promotions.

"They likely need to close more of their stores over time," says David Berman, founder of Durban Capital, a hedge fund focused on retailers that is avoiding L Brands. "It is one of the best run retailers, but they are fighting against the tide."

Some investors are trying to profit by betting against Mr. Wexner, believing that his commitment to stores and malls is starting to hurt the business -- 6.9% of shares outstanding are sold short, held by investors betting they will decline in value.

Others are keeping faith in Mr. Wexner, the longest serving CEO of an S&P 500 company. "He's the straw that stirs the drink," says Michael Goody, a senior analyst at Scharf Investments, which owns about 3.8 million shares of L Brands. "This is in his blood."

Late on a Tuesday night, Mr. Wexner looped his Chevy Volt around the fountain in the middle of Easton Town Center, the open-air shopping center he helped design nearly 20 years ago.

The mall is just five minutes from his office, and he comes here often, parking in front of Victoria's Secret. "Humans are fundamentally pack animals," he says. "It hasn't changed for thousands of years."

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com

 

(END) Dow Jones Newswires

February 06, 2018 02:47 ET (07:47 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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