(Filed Under Financial and General Interest News). The number of Victoria’s Secret stores here and around the world will take another big jump in 2014, most likely topping 1,100 in the U.S., according to parent company L Brands’ annual report for 2013 and information released during the firms 4th quarter conference call.
In addition to adding “approximately 50 new stores” and expanding existing stores in the U.S., the firm plans to add seven new Victoria’s Secrets to the 34 that were in Canada at the end of February. In the U.K., six new stores are being added to the five already located there. In the Middle East where four stores were operated by partner at the start of the year), eight to ten stores are planned to be added in 2014. And about 100 new Victoria’s Secret, Beauty & Accessories stores (which are operated with partners and only carry a small amount of intimates) will be added to the 198 that existed around the world (about a third of the time in airports) at the end of 2013.
In the U.S. the increases will come a year after the number of Victoria’s Secret stores was expanded from 1,019 on February 2, 2013 to 1,060 on February 1, 2014 (an expansion which takes into account the closing of 13 stores during the same period).
The recently released annual report contained other interesting insights into L Brands’ experiences and strategies as they relate to intimate apparel. (In addition to owning Victoria’s Secret, the firm also owns La Senza (the Canadian intimates chain), PINK, the Bath & Body Works and Henri Bendel).
Interestingly, a proposed expansion into the U.S. by La Senza (which has maintained about 157 stores in Canada for the past year) has been shelved according to Martin Waters, EVP international, speaking during the 4th quarter conference call (as transcribed by www.SeekingAlpha.com). But despite the challenges the firm has had with La Senza, L Brands is certainly not planning to abandon it. Said Waters, “we absolute[ly] believe in the notion of owning the three best intimate apparel brands in the world, Victoria’s Secret, PINK and La Senza, and having clear blue water between the positioning of each of those brands. And I think evidenced by La Senza continuing to trade well in centers in Canada and the Middle East where Victoria’s Secret has entered in a dominant way gives us great optimism that we can position those brands differently and that La Senza can have a relevant place in our enterprise.” (According to the 2013 annual report, outside of Canada “La Senza has more than 330 stores in 30 countries operating under franchise and licensing arrangements”).
Sports bras are an important new emphasis in Victoria’s Secret. “We made the decision that we felt like that we had a great assortment in our sport bra category. So we said, let’s go forward and roll sport bras to all stores, of which we did in October,” declared Sharen Jester Turney, president and CEO of Victoria’s Secret in the 4th quarter conference call. “We’ve been very pleased with the performance of the sport bras. As we continue to go forward, we have rolled the full assortment of sport out to more stores. Where we continue to roll out the full assortment, it can penetrate a store anywhere from 10% to 15%. So our focus was, okay, we’re best at bras. Let’s go dominate that category. We see great repurchase in that sport bra category. We’ve seen new customers in that sport bra category into Victoria’s Secret. So we’re feeling very optimistic about that as we go forward.”
Apparel is one category that has repeatedly suffered at Victoria’s Secret in recent years, and its presence seems destined to be further reduced. In an answer to a question during the recent conference call about when the “minimization of apparel online” will come, Turney replied, “I think into fall 2014 and into spring 2015.”
At the same time, Turney is upbeat about PINK’s loungewear segment, which she said makes up about 45% of the brand. “The difference between the PINK apparel and the Direct apparel, the Direct apparel is truly, truly street wear, it’s shoes, it’s denim. What PINK is in is truly the lounge that actually targets that 18-year-old collegiate customer. And that’s the real focus of that apparel business. And that’s something that’s not going to go away for us. And that’s something that we’re going to continue to focus on. But at the same time we do that, our penetration is moving higher and higher to the bras and to the panties. So when we think about that intimate apparel business in PINK is that the dominance will be bras and panties and the apparel is the icing and the layer that goes back to that.” These comments also came in the recent conference call.
Victoria’s Secret’s optimism about PINK is notable when seen against the backdrop of recent store closings by other brands targeting younger women. For example, Abercrombie just finished closing all 28 of its Gilly Hicks lingerie stores (which targeted a college-age customer). And American Eagle just announced it will this year close 25 to 30 of its aerie lingerie stores (which target an even younger audience, “girls” 15 and up), after already closing 29 of the stores in its fiscal year 2013.
L Brands, in its current annual report, explained its own, two stage strategy for success with women as they age: “At Victoria’s Secret, we market products to the college-age woman with PINK and then transition her into glamorous and sexy product lines, such as Body by Victoria, Angels and Very Sexy.”
Despite L Brands’ success in the U.K., creating stores or country-specific websites in other parts of Europe is “just not our highest priority right now,” said Waters during the 4th quarter conference call.
Waters did note that the company is optimistic about “Southeast Asia where we’re seeing great growth in Victoria’s Secret, Beauty & Accessories and in the Bath & Body Works format, and La Senza continues to perform well there. And of course, that is the lead indicator for China, which will be an incredibly significant market for us in the future. We will open our first Victoria’s Secret, Beauty & Accessories stores in Mainland China later this year. So excited about that.”
NOTE: Your Email will not be displayed.