Victoria’s Secret is leaning into comfort and women are taking notice

Source: Victoria’s Secret

At first glance, shoppers may find it hard to believe that Victoria’s Secret’s new lingerie line is actually from Victoria’s Secret.

In mid-February, the retailer unveiled its latest collection of bras and panties, known as Love Cloud. The line is focused on all-day comfort with minimal frills, Victoria’s Secret said. The company also selected women of diverse backgrounds and body types – including its first-ever model with Down syndrome, Sofia Jirau – to star in the collection’s marketing campaign.

The launch of Love Cloud is yet another sign that Victoria’s Secret’s is serious about working to overhaul its image – from racy and exclusive to tasteful and inclusive. And, especially for skeptical investors, it could help propel sales in the coming quarters. Victoria’s Secret shares are down more than 4% year-to-date. The stock has fallen more than 20% in the past six months, taking the retailer’s market capitalization to $4.8 billion.

Victoria’s Secret revenue in 2020 fell 28% to $5.4 billion from $7.5 billion a year earlier, in part due to Covid-related store closures and hampered consumer demand. The company may provide more details when it reports fiscal fourth-quarter and full-year results after the market closes on Wednesday.

The Victoria’s Secret shift also comes as women look to incorporate more comfortable items into their wardrobes, even as they return to social settings, including going to the office. Analysts seem to be in favor of Victoria’s Secret wanting to do it right.

This means the company is going back to the drawing board for new merchandise, according to Victoria’s Secret design chief.

“We are seeing innovation coming back to our business,” Janie Schaffer, Chief Design Officer, said in an interview.

A veteran of the business, Schaffer joined Victoria’s Secret in 2020 after a stint at British department store chain Marks & Spencer. Schaffer brought in a new team to bring a fresh perspective to the business. It seems like a successful decision at first.

Schaffer’s appointment also came amid a wider reshuffle at Victoria’s Secret. Martin Waters, former head of the international division of L Brands, was appointed at the end of 2020 to be managing director of Victoria’s Secret. At the time, the company also announced a new chief human resources officer and executive vice president of North American store sales, who were tasked with improving employee morale and winning back customers.

This all happened shortly before Victoria’s Secret spun off from Bath & Body Works to become a separate publicly traded entity in August.

Since then, Schaffer has played a key role in creating Love Cloud, which she has described as “the world’s most comfortable bra”. It’s a stark departure from the wire-filled, padded bras that Victoria’s Secret has debuted in the past.

“In the short time that I got back into the business, we released a maternity nursing bra…we released a mastectomy bra,” she said. “Truly acknowledging women at every stage of their lives. That’s what drives us all.”

In the meantime, the company has set about revamping its US retail stores to bring in cooler fixtures, lighter paint on the walls, and mannequins of all shapes and sizes to welcome customers inside. Victoria’s Secret has announced plans to revamp all of its approximately 1,400 locations worldwide in the coming years. It is also testing a smaller, non-mall format.

Signs of image improvement

A recent survey found that women are increasingly paying attention to Victoria’s Secret turnaround.

Bank of America surveyed 1,000 women aged 18 to 65 in January and found that respondents had fewer complaints about Victoria’s Secret compared to pre-pandemic times.

Thirteen percent of women said they liked Victoria’s Secret better than before Covid, while 23% liked it less and 64% hadn’t changed their minds, BofA found. The company noted that this has improved from 2019 levels, when 33% of respondents in a similar survey said they liked Victoria’s Secret less in the past 12 months, with many women citing a poor image of Victoria’s Secret. Mark.

BofA has also found that the PINK brand, a division of Victoria’s Secret that caters to young women, has maintained its brand image more consistently in recent years. The biggest consumer complaint about PINK, the company found in the same survey, is price gouging.

“The Victoria’s Secret rebrand appears to be working,” BofA analyst Lorraine Hutchinson said in a note to clients. “Victoria’s Secret’s resumption of bra launches is a key strategic shift and is crucial to increasing market share.”

Choose comfort

By launching Love Cloud, which includes bras in six different silhouettes, Victoria’s Secret hopes to appeal to women of all ages who are looking for everyday lingerie at a reasonable price.

Kristen Classi-Zummo, fashion apparel industry analyst for NPD Group, said women are increasingly looking for comfortable bras, including sports bras, for everyday wear. Total U.S. bra sales rose 6% in 2021 from 2019 levels, according to NPD. Within that figure, sales of sports bras jumped 43% and non-sports bras increased 7% on a two-year basis. The latter category includes soft bras, such as those launched by Victoria’s Secret as part of Love Cloud.

“There’s been this fundamental shift in the types of bras that women are looking for,” she said. “We’ve all moved to a more comfortable, more casual wardrobe…and that ultimately affects what we wear under those clothes.”

Of course, Victoria’s Secret also competes with a number of emerging brands such as ThirdLove and Lively, as well as American Eagle’s Aerie division, which sell a wide selection of comfort-focused bras, including sports bras and bralettes. And from the start, these retailers have been more inclusive in their consumer marketing.

Jessica Ramirez, retail analyst at Jane Hali & Associates, said she’s noticed Victoria’s Secret has become more inclusive, with its merchandise selection in stores and online spanning more sizes and the retailer’s designs appearing less retouched. in the pictures.

Benefit overview

In the short term, however, lingering supply chain constraints could overshadow any progress the company has made, Ramirez said.

Victoria’s Secret is expected to release its fiscal fourth quarter results after market close on Wednesday, where it is expected to shed some light on the topic of supply chain and discuss the financial implications of Love Cloud’s recent launch.

In late December, the company reaffirmed its previous guidance which called for sales to be flat at 3% from $2.1 billion a year earlier. He sees diluted earnings per share in the range of $2.35 to $2.65.

Analysts expect earnings to be at the high end of that range, at $2.64 per share, and sales of $2.14 billion, according to a Refinitiv survey.

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