Victoria’s Secret will close 53 stores this year as the lingerie chain continues to lose ground to the competition, which includes startups and large retailers. A disappointing holiday showing preceded the planned cutbacks, with sales at stores open at least a year falling 7 percent during the quarter, parent company L Brands said late Wednesday.
Victoria’s Secret is an American designer, manufacturer, and marketer of women’s lingerie, womenswear, and beauty products. Founded in 1977 as a response to packaged underwear, which the company’s founder considered to be “ugly, floral-print nylon nightgowns”.
In 2016, direct sales only grew 1.6% and fell by 7.4% in the last quarter of the year, typically a high revenue period due to the holidays. The company discontinued its use of a print catalog and dropped certain categories of clothing such as swimwear. Sales revenue continued to stagnate and drop in early 2017.
In November 2018, it was announced that CEO Jan Singer had resigned amid declining sales. According to The Wall Street Journal, quarterly same-store sales in the last two years raised only once. The announcement came one week after CMO Ed Razek made the controversial comment that the company doesn’t cast transgender or plus-size models in its annual fashion show “because the show is a fantasy.”
The brand, which was once known for its sexy bras, has lost out as women have switched to more comfortable bra styles and brands that seem more inclusive from the likes of American Eagle’s Aerie, Third Love, Lively and Adore Me. The $7.2 billion bra category is also seeing new competition from Target, which this spring plans to launch three new lines of lingerie and sleepwear.
“Given the decline in performance at Victoria’s Secret, we have substantially pulled back on capital investment in that business versus our history,” L Brands said in the earnings commentary.
The store announced that rising costs and plateauing sales mean that the brand was down by 45 percent for the 2018 fiscal year.
The closings announcement comes after 30 Victoria’s Secret stores closed in 2018 compared with the average of 15 stores a year, company officials said during a quarterly earnings call with analysts Thursday.
During L Brands’ earnings call Thursday, Stuart Burgdoerfer, the company’s executive vice president and chief financial officer, said the need to close stores was “based on the overall performance of the Victoria’s Secret business, not meeting our expectations or having year-on-year declines.”
The closings make up about 4 percent of the company’s 1,143 Victoria’s Secret stores worldwide. L Brands also owns Bath & Body Works.
L Brands has announced that they choose which stores to close based on a number of factors, including current and predicted performance along with local factors.
Victoria’s Secret is closing stores all over North America, including 3 in Canada. We do not know exactly which stores will be closing, but we will update this post as more information becomes available.
Ref. NBC News, Wikipedia, CBS News, mtlblog.com, usatoday.com, cnbc
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