Earnings Results: Lingerie and other intimates are cheaper than Victoria’s Secret wants them to be, amid weaker clothing demand

Shares of intimate-wear maker Victoria’s Secret & Co. VSCO, -8.72% fell sharply after hours on Wednesday after company executives cut their full-year sales outlook, saying they had to lower their prices more than they wanted to in the first quarter and that weaker demand would likely endure for the rest of the year.

The company said it expects full-year sales to be “flat to down low-single digits” when compared to last year. That forecast is more downbeat than its expectations for a “mid-single-digit range” increase given in March.

“The first quarter continued to be a volatile macro environment for our customer and as the quarter progressed business became more challenging” Chief Executive Martin Waters said in a statement. “Sales were in-line with our original expectations; however, we were more promotional than planned and ended the quarter at the lower end of our adjusted operating income guidance.”

“Sales performance was particularly challenging in our core categories, where there was significant decline in the overall stores and digital intimates market in North America,” he continued.

While he said that international growth remained strong, led by gains in China, the weaker demand would likely continue for the rest of the year. Waters said he hoped to reverse that trend by launching new bras this year, rethinking the company’s strategy for its PINK line and expanding its shopper loyalty program.

Still, shares tumbled 11.8% after hours on Wednesday.

Shares of some clothing retailers, like Gap Inc. GPS, +0.75% and Urban Outfitters Inc. URBAN, -1.07%, have rallied recently following better-than-expected results. But analysts remain concerned about how higher-priced essentials, which take greater priority for shoppers, will affect demand for clothing.

For its first quarter, Victoria’s Secret’s results also came up short. The company reported net income of $1 million, or 1 cent per share, compared with $81 million, or 93 cents a share, in the same quarter last year. Revenue came in at $1.41 billion, down from $1.48 billion in the prior-year quarter.

Excluding the impact of amortization, restructuring charges and this year’s acquisition of the intimates brand Adore Me, Victoria’s Secret earned 28 cents a share, compared with $1.11 a year ago.

Analysts polled by FactSet expected adjusted earnings of 54 cents a share, on revenue of $1.42 billion.