Here’s The Real Problem Behind Victoria’s Secret’s Dramatic Fall

Source: https://www.forbes.com

Victoria’s Secret has lost its sexy, but don’t blame it solely on the rise of competition like American Eagle Outfitters’ Aerie brand.

The No. 1 U.S. lingerie label, known for its “Angels” and the glitzy annual fashion show broadcast worldwide during the December holiday season, on Thursday reported a 1% decline in comparable sales in the five weeks ended July 7, after lower demand for its bras and the Pink label targeting college-age customers offset gains in its beauty products. That drop extended a streak of mostly declining comparable sales the chain has reported since 2016.

Worse yet, when stripping out online and other direct sales, store-only comparable sales fell 6%. Victoria’s Secret, more than half of parent company L Brands’ sales, had almost 1,200 stores in the U.S. and Canada at the end of the fiscal month of June. In contrast, smaller sister chain Bath & Body Works reported a 10% jump in June comparable sales.

L Brands LB -12.05% shares slumped 12% Thursday, wiping out about half of their value this year.

What got investors in a sell-off mood? The decline came even after Victoria’s Secret extended its semi-annual sales, typically a big traffic-and-sales driver, by two weeks after what the company described as a “soft start with negative traffic levels.” Not only did the longer sale period fail to drive traffic and sales, but the deeper discount levels used to lure demand also led margin to decline “significantly,” L Brands said. Excess merchandise also foreshadows additional discounts down the road: Inventory-per-square foot jumped 20% at the end of the month.

Why has the once-hot brand suddenly fallen from grace? In its heyday, Victoria’s Secret was so hot and held such promise that L Brands, once a big specialty apparel retail empire, decided to get rid of its apparel chains from Express to The Limited to focus primarily on Victoria’s Secret and Bath & Body Works, brands the company said would make it less subject to the cycles of the fashion business.



Categories: Apparel, Brands, Business, Retail, USA

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