In its heyday, Victoria’s Secret was the kingpin of the US
lingerie market, but in recent years the brand faced declining sales and also
lost market share to more body-inclusive brands like American Eagle's Aerie.
According to the Columbus (Ohio-based company), decisions
like terminating the production of swimwear and apparel products in March 2016,
discontinuing the catalogue and substantially reducing direct mail promotions
for bras and panties caused a market slip by 2 percentage points, to 28.8% in the
past 5 years through 2017, compared with the 0.4 percentage point gain, (to
2.3% )that competitor brand Aerie declared over the same period (source: Euromonitor).
Considered out of touch with current times, VS is facing
increasing competition on the US lingerie market from brands like Aerie, Third
Love, Savage x Fenty or Walmart-owned Bare Necessities. A changing broadcast
landscape, and the shifting tastes of consumers are demanding a more
body-positive and diverse industry. Efforts like ditching photoshopped images
and adopting a more realistic approach (the #Aeriereal campaign) proved to be
welcomed by consumers, while touched-up models are considered deceptive and look
“fake”.
In the quarter that ended Nov. 3rd 2018 the lingerie brand reported a 2% decline in comparable sales, followed by a 6% tumble at its brick-and-mortar stores. In addition, the brand's fiscal third-quarter operating income declined 89%($120 million).
Changes are slowly happening though as Jan Singer, former
CEO, resigned and will be replaced early 2019 by Tory Burch president
and former Club Monaco president and CEO John Mehas. We will have to wait and see how the new CEO will approach this kind of issues and if the brand will regain its market share.
References:
file:///C:/Users/Mihaela/Downloads/LB%203Q%202018%20Earnings%20Presentation%20-%20FINAL.pdf
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