Stocks

Victoria’s Secret Is Getting Exposed

Victoria’s Secret is a brand most women and men know. But did you know they are owned by L Brands?  L Brands also owns Bath & Body Works as well.  The “L” stands for Limited, but should consider changing the “Limited” to “Loser.”  I mean just look at this chart.

This past week L Brands had an analyst day, in which the focus was on Victoria’s Secret and the company thinks the brand could achieve 10-15% operating margins longer term.

L Brands’ flagship business, Victoria’s Secret, remains in trouble. So what L Brands revived their Victoria’s Secret swim business, less than three years after the company said it would exit that “non-core” category. 

This past week L Brands had an analyst day, in which the focus was on Victoria’s Secret and the company thinks the brand could achieve 10-15% operating margins longer term.

If L Brands Inc. is to recover some of the $16 billion in market value it has lost in the past three years, there is no doubt where it must start: by reviving its flagship Victoria’s Secret chain.

The lingerie retailer has been flailing as it missed key fashion trends and clung to an outdated glamour-puss vibe in its marketing.

Victoria’s Secret has been working to change its pricing strategy to offer a mix of “good, better, best” items that it hopes will nudge shoppers toward paying more premium prices. It is a sensible choice, as it would make Victoria’s Secret more distinctive from its sister chain, Pink, and could help pad profit margins.

The problem is that the lingerie chain has leaned so heavily on discounts for so long that it is going to have a hard time training shoppers to pay up. Executives didn’t have a particularly satisfying explanation for how they will manage to do that.

Source

I personally think their is too much competition out there for L Brands to regain market share. I mean the internet has leveled the playing field so the barriers to entry have been knocked down. For example, True&Co, an online company launched in 2012, has women fill out a questionnaire to identified the right size, style and preferred bra in which they receive an email in minutes of recommended bras to try on at home (very similar to the Stitch Fix business model).

OK, have enough bras, need underwear, how about Lively, which was started by…get this, a former senior merchant for bras at Victoria’s Secret. How do women know about Lively, from Instagram and Facebook where Lively can get direct feedback from their followers?

Thus, the chart suggest, price is heading down to the monthly demand at $10.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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