It’s the end of an era. Some major changes are coming to Victoria’s Secret. The lingerie brand is revamping its image in order to appeal to a young crowd in the social media age.
Victoria’s Secret first announced in April that they will eventually phase out their coveted catalogs, swimwear, apparel, accessories, and shoes both online and in-stores. The company said it needs to rebrand its focus on its core merchandise categories — bras, panties, and beauty — in a recent earnings call on Thursday, May 19. That means the company will make some major changes, such as phasing out its swimwear and non-athletic apparel items, such as T-shirts and sweaters.
However, Victoria’s Secret executives did not reveal whether or not they would continue to sell the workout apparel, which has fit in with the athleisure trend, at the moment.
Surprisingly enough, Victoria’s Secret swimwear line wasn’t enough to attract their chosen demographic, even with the 2016 Victoria’s Secret Swim Special earlier this year. According to a FactSet transcript, the brand “came to a conclusion that the swim business was not one of those core categories, that it had been a flattish business for the last several years,” said Stuard Burgdoerfer, chief financial officer.
According to Fashionista, these major changes are part of a long-term strategy to help cut costs and create synergy among both their in-store and online offerings. Victoria’s Secret Pink fans won’t have to worry as the teen line will now operate as a “distinct business with their own executive leadership.” These new changes will also “put some pressure on the business,” claims Burgoerfer, but he remains hopeful for the future of the brand.
“We have some expense savings that we’ve actioned as well, including the elimination of the catalog spend and a meaningful reduction in our home-office overhead, which, in part, offset the sales and profit pressure from the category exits and the impact of the promotional changes that we’re implementing,” he added.
The big change is also a great news for customers since swimwear and apparel items will be marked down at various Victoria’s Secret locations and online. According to the Huffington Post, there are already markdowns on one-piece and two-piece swimsuits, along with cover-ups.
That hasn’t stopped Victoria’s Secret’s business from struggling though. Its parent company L Brands Inc. reported sales of $2.6 billion for the first quarter, meeting the predictions on the FactSet consensus. Same-store sales increased three percent, while same-store sales for Victoria’s Secret increased by two percent.
As Victoria’s Secret struggles to find its identity, competitor Aerie is finding its place in the industry. That’s probably because the American Eagle run brand has a clear core focus in the categories of lingerie, loungewear, and swimwear.
The store has seen a 32 percent jump in first-quarter sales at Aerie stores throughout the year. It even helped American Eagle post a higher-than-expected rise in quarterly sales in a struggling retail environment that’s haunted by store closings, mergers, and massive layoffs. Unlike Victoria’s Secret, Aerie incorporates the use of models who are not airbrushed in their social media marketing campaign. Another reason why Aerie is doing so well is because it still sells swimwear, which the brand plans to expand in the future, Nomura analyst Simeon Siege told Reuters.
“We believe Aerie is in a strong position to continue gaining share across all its product categories. The strength is coming at the same time that Victoria’s Secret has been slowing – a fact we don’t see as coincidental.”
Another change that Victoria’s Secret is making has to do with executive operations of its core lingerie stores. The company has hired on Jan Singer, who was the chief executive of Spanx. She’s expected to take over the position in September and will report to CEO Les Wexner, who took over Victoria’s Secret after Sharen Turney stepped down in February.
What are your thoughts on Victoria’s Secret phasing out its apparel, catalog, and swimwear? Does this news upset you in any way? Sound off below in the comments section.
[Photo by Dimitrios Kambouris/Getty Images for Victoria’s Secret]