Daily Management Review

Victoria's Secret needs a miracle


09/04/2017


Victoria's Secret brand is no longer the same as it was before, and burnout was noticeable even before customers began to visit its stores less often. Now, when the problems are obvious, it is difficult to imagine how the retailer and its parent company will solve them.



WestportWiki
WestportWiki
Not so long ago, Victoria's Secret was popular with teenagers who adored the line of home clothes and body spangles, and women looking for fashionable underwear. Any American beach looked like advertising swimwear of this brand, and there was a smell of toilet water Love Spell in schools and shopping centers. Even the long-awaited television show "America's Next Top Model" was created in part because of the success of Tyra Banks as the "angel" of Victoria's Secret. Yet, times have changed, but the brand does not.

Haute couture still gets away with the fact that the cut and dimensional ruler of their products have little in common with real female forms. But Victoria's Secret is, in fact, are just shops in shopping centers, and the buyers coming to these centers disagree with the brand’s standards and their template design does not suit them. Victoria's Secret bras are designed for women with small breasts, and many of them cost much more than $ 50. However, according to research of another retailer of underwear, an average American wears a bra size of 75 DD. This means that a fairly large number of women are even bigger, and they simply cannot shop at Victoria's Secret. As for the average size of women's clothing in the US, the data varies depending on the method of calculation, but in general it is closer to 16 than to 2.

And just like any other clothing network, online stores are serious competitors to Victoria's Secret. Of course, this network is not the only one that tries to satisfy consumers' requests in terms of fashion, size and price. But the brand concept limits it in all these areas, and now the network and its shareholders are paying for it.

In mid-August, shares of L Brands fell to a six-year low, after the company gave a weak profit forecast and reported that comparable sales of Victoria's Secret in the last quarter fell by 14%. Bath & Body Works brings L Brands about 30% of revenue, and sales of this network grew faster than expected. But the dynamics of the shares of L Brands are still affected primarily by what is happening with the net of underwear.

There is no obvious solution to the problem described. The Victoria's Secret brand needs urgent and serious changes. It has a lot of competitors - from the new Aerie brand from Eagle Outfitters Inc. to online store; the demand for its products has declined, especially now that it has ceased to sell swimwear. Can L Brands buy another retail brand to stimulate growth and economic efficiency? The company already has a lot of debts, so such a deal would be risky.

While analysts who follow L Brands are still optimistic, it's worth remembering that they recently made a mistake in their predictions about other retailers that seemed more resilient to a recession in the industry than it was in reality. Victoria's Secret is much more vulnerable.

source: bloomberg.com






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