Things are going from bad to worse at Victoria's Secret

  • April sales declined for both Victoria's Secret and PINK brands.

  • This marks the second month of declining sales at PINK, which is worrying because the brand accounts for 40% of Victoria's Secret segment sales.

  • Watch L Brands trade in real-time here.

Victoria's Secret's PINK, which had become one of parent company L Brands' only areas of growth, is struggling.

April marked the second straight month of declining sales. Before the two-month skid, sales had never fallen. And given the flat sales at Bath & Body Works, Jefferies analyst Randal Konik expects only more bad news to come for L Brands.

"It all means share losses are mounting and promos are being used to drive sales which are still weak," Konik wrote in a note to clients. He lowered his 12-month price target for L Brands down to $23 from $30 and recommended clients keep selling shares.

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The negative trend at PINK was especially worrying as the more than $3 billion brand accounts for 40% of Victoria's Secret segment sales. Konik blames L Brands' other store, Aerie, for stealing market share. He also notes that same-store-sales at PINK declined despite promotions, which means the failures at Victoria's Secret are now spreading to its sister store.

Unfortunately for L Brands, competition is only starting to heat up as Venture Capitalists target opportunities in the lingerie market. In the event that L Brands' declines accelerate, Konik wrote free cash flow may "wane enough to put the dividend in question."

L Brands said in a press release Thursday that it expects to report first-quarter earnings at the lower end of its $0.15-$0.20 per share guidance, sending shares tumbling by more than 7%.

L Brands is down nearly 47% this year.

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