Victoria’s Secret CEO: ‘The detractors are gone’
Victoria’s Secret reported Wednesday that fourth-quarter net sales rose 3.6% to $2.2 billion, with comps up 1% (and 12% in physical stores).
Net income fell 12.9% to $246.1 million, according to a company press release.
The lingerie maker is set to launch a new digital brand for tweens dubbed “Happy Nation” that will offer “undies, first bras, comfy clothes and body care that parents and tweens can feel good”, according to his presentation of the results.
Overview of the dive:
In a conference call with analysts on Thursday morning, Victoria’s Secret CEO Martin Waters declared victory in the company’s efforts to catch up by moving away from the highly sexualized marketing and merchandising that had so of customers shopping elsewhere in recent years.
“The enemies are gone,” he said.
Waters dismissed the idea that the brand’s about-face would have caused him to lose customers, despite early warnings from some that it would be too drastic. While Victoria’s Secret has experienced declining sales and market share losses in recent years, it has retained its position as the world leader in the lingerie segment.
“When we first announced our repositioning, we received a significant amount of mail from people saying, ‘This is terrible, you’re burning the dirt, you’re ruining your brand. We like the way it was before. Why are you changing it? “, he said, adding that these critics were generally men and “people who do not subscribe to the values to which we subscribe.
When it comes to merchandising, however, the brand can retain its past to a significant degree, even as it becomes more inclusive and responsive to consumer demand, according to analysts at Jane Hali & Associates. Victoria’s Secret now offers vintage underwear, maternity and mastectomy bras, and focuses on trends such as activewear, loungewear and shapewear, according to research by Jane Halli.
“As [Victoria’s Secret] is evolving their branding and product assortment, the assortment has improved, but we don’t see consistency,” they wrote in email comments. “We notice that most of the assortment in-store and online is still leaning towards looking too sexy.
The changes to his brick-and-mortar strategy are also significant. Victoria’s Secret plans to incorporate some elements of a new store concept introduced last year into stores this year and next and continue its move away from the mall. The 15 new stores planned for this year will be non-mall locations of about 5,000 square feet, compared to its traditional mall stores of 8,000 to 10,000 square feet, Waters said.
“We have very strong penetration of our store portfolio in malls right now, and we have low penetration outside of malls, and that gives us opportunities,” he said.
The company promised more information about its interpolation line in April. Whether the new brand cannibalizes its pink banner remains to be seen, but it’s poised to appeal to an underserved customer and its messages could compete with American Eagle’s successful Aerie brand, according to Jane. hali Jessica Ramírez, Retail Research Analyst at & Associates.
“We’ll have to wait and see what the assortment and brand messaging looks like,” she said over email. “However, the Pink brand is aimed at an older teen/teen consumer. The tween market is typically missed by brands due to product size and messaging. Much of Aerie’s success outside of of the product is due to the messaging and feel of the brand.”