By Richa Naidu and Gayathree Ganesan
(Reuters) - Shares of L Brands Inc (N:LB) tumbled to a three-year low on Thursday, a day after the retailer said it expected sluggish demand for Victoria's Secret lingerie to force its biggest brand's steepest ever monthly decline in comparable sales.
Victoria's Secret, the long-time lingerie market leader, has been struggling to boost sales amid changing trends such as the emergence of bralettes, which are cheaper and easier to size and buy online than regular bras.
L Brands, which recently exited some product categories, including Victoria's Secret's swim and apparel business, said on Wednesday it expected February comparable sales at its biggest brand to fall by about 20 percent. Comparable sales fell 10 percent in January.
Victoria's Secret last reported a double-digit decline in comparable sales during the 2007-09 financial crisis, but even then, the decline did not surpass 15 percent.
L Brands, whose shares slumped as much as 17.5 percent on Thursday, attributed about half of its overall net sales last year to Victoria's Secret.
There's no question that bralettes have changed the intimates selling experience, removing barriers to entry that Victoria's Secret has held and allowing other brands to start chipping away at share, Instinet analyst Simeon Siegel told Reuters.
"On top of that, even though Victoria's Secret is selling bralettes - they're selling a nice amount of units - their problem is bralettes are lower priced (than regular bras)," Siegel added.
American Eagle Outfitters Inc's (N:AEO) down-to-earth and cheaper Aerie was one of the first lingerie brands to hop onto the bralette bandwagon.
Aerie, one of several brands that is stealing millennial attention from Victoria's Secret, has also gained traction through marketing campaigns targeted at the every-woman, with ads featuring models of all shapes and sizes who often aren't air-brushed.
This contrasts starkly with high-fashion, picture-perfect Victoria's Secret "Angels".
"Victoria's Secret is still a little fake and plastic ... I think they have an image problem and if you look at the competition out there and you look at the messaging, what resonates right now is not the Victoria's Secret message," said Gabriella Santaniello, analyst and founder at A-Line Partners.
"They are sending mixed messages to the consumer and that conveys a lack of authenticity and I think the customer knows that and obviously they're speaking with their wallets."
Victoria's Secret, which has been promoted by a string of celebrity models such as Gisele Bundchen and Adriana Lima, isn't the only struggling high-end lingerie chain. Troubled upmarket lingerie chain Agent Provocateur has also been hit by the luxury spending slowdown.