By Neil Saunders
This is a very mixed set of numbers from L Brands. Total sales growth is reasonable enough, but with sales down at Victoria’s Secret, this is all thanks to Bath & Body Works. Meanwhile, exceptional costs from the closure of Henri Bendel and some impairment charges at Victoria’s Secret have driven the company to a $42.8 million net loss.
Victoria’s Secret should take a leaf out of its sister brand’s playbook as it looks to reinvent itself.
Looking first at Victoria’s Secret, we remain disappointed not only with the sales numbers but by the inertia within the business. The 2% dip in comparable sales comes off the back of a 5% drop in the same period last year. It is also the latest installment of a long period of decline.
Not connecting to consumers
From our own research and from general trends in the market, the reason for this poor performance is clear. The brand is simply not connecting and resonating with consumers in the way that it once did. Its overt sexuality, its focus on airbrushed glamor, and its dark and moody stores are completely out of step with the mood of most modern consumers. However, this is not a new phenomenon. Victoria’s Secret has been out of kilter for a long time — and has seemingly done little to bring itself back into line.
Much of this failure to change comes down to embedded attitudes within management. The recent insensitive comments about transsexuals from Chief Marketing Officer Ed Razek in a Vogue interview characterize the problems. Not only are such remarks bad for the brand’s image, but it also earned a sharp public rebuke from the CEO of more incisive rival ThirdLove, which has been stealing share from Victoria’s Secret for some time.
In theory, the departure of Jan Singer as CEO should help herald in changes someone coming in will have fresh ideas about reviving the fortunes of Victoria’s Secret. However, much depends on who that person is and where they come from. If they are an internal appointment, then the chances of change are less than if it is someone from outside. In either case, powerful personality will be required to blow away the entrenched attitudes that have prevailed for too long.
BBW team aware of trends
Standing in marked contrast to Victoria’s Secret is Bath & Body Works. The company’s wholesome brand image and its focus on small indulgences are paying real dividends, especially in a consumer economy where shoppers have more money to treat themselves.
Two main things underpin Bath & Body Works’ success:
- Its strong range development means that assortments are constantly changing. This encourages regular visits to online and stores. It also means that the company is good at jumping on trends like aromatherapy-based scents and the ongoing popularity of candles.
- Good marketing and promotions help drive volumes through the business.
Both of these things stem from the fact that the BBW team is much more attuned to the market and consumer trends than is the case at Victoria’s Secret. Indeed, the cultures at the two divisions could not be more different. Victoria’s Secret should take a leaf out of its sister brand’s playbook as it looks to reinvent itself.
Neil Saunders is managing director of research firm GlobalData Retail.