Dive Brief:

• L Brands on Wednesday reported that third quarter net sales fell 3.5% year over year to $2.7 billion​. By brand, Victoria's Secret sales fell 7.6% to $1.41 billion, and Bath & Body Works sales rose more than 11% to $1.06 billion.

• Comparable sales fell 2% in the quarter, with Victoria's Secret down 7% and Bath & Body Works up 9%. In stores alone, comps declined 3%, with Victoria's Secret store comps down 8% and Bath & Body Works up 5%.

• Adjusted operating income fell to $96.3 million from $155.6 million last year, and adjusted net income was $5.7 million compared to $45 million last year.​ With a $247.5 million impairment charge on Victoria's secret assets and other items factored in, the company's profits were negative in Q3, with a net loss of $252 million. The company also said that it now expects full-year adjusted earnings of about $2.40 per share, within its previous range of $2.30-$2.60 per share.

Dive Insight:

Victoria's Secret has been a drag on L Brands for several quarters now, and the third quarter gives little indication of that changing anytime soon. The company's quarterly results were better than feared, with earnings coming in at the lower end of its expected range, but that was largely thanks to its Bath & Body Works personal care business.

"We continue to be in awe of BBW's comp and operating income growth, particularly in a promotional environment," Roxanne Meyer, MKM Partners managing director, said in emailed comments. "[H]owever, Victoria's Secret performance is a significant offset and is increasingly concerning, even with new leadership at both VS and PINK." ​

Change, particularly at Victoria's Secret but also at the lingerie unit's Pink sub-brand, was a central theme of the company's recent meeting with shareholders. Newly arrived brand chief John Mehas at that time unveiled modifications to merchandise and stores at Victoria's Secret that he said addressed the consumer shift away from the sexualized marketing models intrinsic to the brand.

For the most part, however, that has yet to appear. "Our concerns are only mounting at Victoria's Secret overall. While there were pockets of positives at VS in 3Q, including intimates and pant performance at PINK, and a return to positive (non-promotionally driven) comps at VS Beauty, declines at PINK apparel and at VS lingerie were steep," Meyer warned. "The fact that e-commerce sales fell 6%, reversing the last several quarters of gains, speaks to the weak demand for the assortment overall.​"

Meanwhile, the market has moved on without it. Even Target — with "inclusive messaging and sizing" across new private label lingerie brands and a limited tie-up with True & Co. — along with a slew of direct-to-consumer upstarts, has responded to evolution in the market, according to emailed comments from Jane Hali & Associates analysts.

"Despite the illusion of a turnaround which LB stated during their investor day, the initiatives we have seen in Q3 are still not in line with the trends in intimates and swim," the Jane Hali team said in emailed comments."[T]hese categories are going through a disruption and [Victoria's Secret] continues to lose share of the market."

The company appears to be grappling with Victoria's Secret troubles, beyond the merchandising and marketing changes that analysts have called for and that have been promised by executives. That includes a possible spinoff of the brand, according to a report by CNBC citing unnamed sources.