It doesn't take genius to understand the appeal of beautiful girls parading in their underwear. From the 1990s onwards, Limited Brands, the company behind Victoria's Secret, turned lingerie marketing into a fine art, or at the very least high fashion. During the 1980s Leslie Wexner made The Limited into a fixture in shopping malls across the US with flashy but moderately priced women's fashion for style-conscious shoppers. He built on that success by transforming Victoria's Secret from a tiny mail order firm into a global brand. The group also extended its presence with the launch of sub-brand PINK, the purchase of Canadian competitor La Senza, and the positioning of personal care and beauty chain Bath & Body Works as its #2 brand. The company changed its name to L Brands in 2013 following the sale of The Limited chain. However, a backlash against "sexy" marketing in the wake of the #MeToo movement has prompted a brutal re-evaluation of Victoria's Secret's positioning, including the shuttering of its flagship annual TV fashion show special. There is also some unease among investors about the considerable influence wielded by CEO and controlling shareholder Wexner, now in his 80s. Among other black marks, Wexner was closely associated for several years with disgraced financier Jeffrey Epstein. There are concerns also over potential fallout from the troubles affecting Victoria's Secret on sister brand Bath & Body Works. Other brands have already been dropped: smaller lingerie brand La Senza was sold in 2019 and fashion store Henri Bendel closed. Group revenues for ye Jan 2019 were $13.2bn with net income of $644m - the lowest profit since 2010. Revenues for ye 2020 will be significantly lower, and a sizeable loss is expected from impairments against the Victoria's Secret brand. Victoria's Secret had more than 1,200 retail outlets worldwide in ye 2019, as well as a substantial ecommerce business. Revenues were $7.4bn, flat on the year before. Bath & Body Works had 1,721 stores in the US and Canada and revenues jumped 12% to $4.6bn.
Capsule checked 14th January 2020
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Adbrands Daily Update 22nd Nov 2019: In a startling reversal of fortunes in the #MeToo era, Victoria's Secret has cancelled its annual fashion show, once a landmark broadcast TV special. Attitudes towards the blatant sexuality of brands such as VS have been gradually evolving in recent years, and sentiment turned sharply against the Victoria's Secret Fashion Show, and indeed the brand itself, at the end of 2018 following comments from longtime CMO Ed Razek about his habit of employing only traditionally beautiful sleek female supermodels. He was widely misquoted as saying, in an interview with Vogue, that "no one has any interest" in plus-sized models - his actual words were slightly less incendiary - and he also ruled out the use of transexual models. The media backlash was exacerbated by several quarters of declining sales, a new ratings low for the 2018 fashion show and then a pushback from investors. One leading shareholder Barington Group wrote to L Brands CEO Les Wexner this year complaining that Razek "has done a poor job of stewarding Victoria's Secret's brand by failing to communicate a compelling, up-to-date image that resonates with today's consumers. While we recognise that Victoria's Secret cannot be all things to all people, we believe that the Company should be delivering a more inclusive marketing message that promotes a more expansive view of beauty." That prompted Razek's departure from the company a few months later. After that the cancellation of the annual fashion special was only a matter of time. "We think it's important to evolve the marketing of Victoria's Secret," CFO Stuart Burgdoefer told investors this week. "There will be more to come as that continues to get evaluated.... [The show] was a very important part of the brand building of this business and was an important aspect of the brand and a remarkable marketing achievement. With that said, we're figuring out how to advance the positioning of the brand and best communicate that to customers."
Adbrands Weekly Update 26th May 2016: It's the end of an era. Victoria's Secret is to stop producing its iconic printed catalogue, making a saving of up to $150m a year. Instead it will re-route all direct sales towards online channels. The group launched a test of this strategy in 4Q 2015 by reducing its catalogue distribution by around 40%. To everyone's surprise there was no detrimental effect; if anything according to finance chief Stuart Bergdoerfer, direct actually increased by around 15%.
Adbrands Weekly Update 18th Feb 2016: In a surprise development, Victoria's Secret CEO Sharen Jester Turney resigned abruptly to spend more time with her family. She has led the business for a decade. Turney was not directly replaced; instead, Les Wexner, chairman & CEO of parent group L Brands, will assume her duties. Her sudden departure doesn't appear to be any reflection of performance. The group recently reported another set of record preliminaries for the year just ended, with Victoria's Secret total revenues up 6% to almost $7.7bn, and group revenues topping $12bn for the first time. Earnings are not reported until next week.
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