Why Victoria’s Secret stock is down today

Actions of Victoria’s Secret (VSCO -3.70%) fell as much as 9.6% in early trading on Thursday before retreating to a 3.4% decline as of 2:37 p.m. ET.

While the apparel giant delivered better-than-expected second-quarter revenue and earnings last night, the company is still seeing declines across most of its business. And with the stock surging earlier this month on news of a new CEO appointment, the stock gave back some of those short-term gains today.

A drunk, but an unenthusiastic one

In the quarter, Victoria’s Secret revenue fell 0.7% to $1.42 billion, with adjusted (non-GAAP) earnings per share of $0.40. Both figures beat analysts’ expectations, with the underlying figure up significantly from a year earlier thanks to the company’s cost-cutting initiatives.

However, the stock did not react favorably. Retail is a tough business, and it looks like the Victoria’s Secret brand may be losing its luster compared to new players like Fenty.

Victoria’s Secret is seeing same-store sales declines not only in its brick-and-mortar stores, which fell 5 percent, but also in its direct-to-consumer online channels, which fell 3 percent. You might think that online sales would be taking away from brick-and-mortar stores these days, but it appears that both channels are actually declining. While last night’s results were an improvement over last year’s same-store sales declines of 14% and 11%, respectively, the slowed declines apparently did not impress investors.

Victoria’s new general manager has work to do

On August 14, Victoria’s Secret named Hilary Super its new CEO. Super actually comes from Victoria’s Secret rival Savage X Fenty and was the CEO of retailer Anthropologie before that. So if anyone knows how to counter the new competitors in today’s more body-positive era, it’s her.

Still, Super may have its work cut out for it as Victoria’s Secret must navigate a brand transformation or adaptation. So while Victoria’s Secret stock trades at a paltry 13.7 times earnings, investors may still want to stay on the sidelines and hear more about its turnaround plan — and see if these moves make a difference financial — before betting on this company.