(Filed Under Financial and General Interest News). In mid-October, Victoria’s Secret held an investor event to discuss how it plans reverse its recent sales declines, acknowledging that making a place for “sexiness” will be a part in the future of the company.
On the eve of the investor event, the company also predicted that although its third quarter results will not be great, they will be better than had been earlier announced.
CEO Martin Waters, explaining third quarter performance to date, said “Our sales growth internationally has been ahead of plan and our sales trends in North America continue to improve each month as planned: August was better than second quarter, September was better than August, and our early October results have positioned us for our best month of the third quarter. This is consistent with our expectations and encouraging as we finalize our plans for the all-important holiday season and fourth quarter selling.”
The company added that “based on quarter to date trends and expectations for the balance of the quarter,” it “estimates adjusted operating loss for third quarter 2023 in the range of $45 million to $65 million, compared to previously communicated guidance range of a loss of $45 million to $75 million.” VS is scheduled to announce the actual third quarter results in the first few days of December.
VS continued that “this adjusted operating loss and adjusted loss per share guidance is based on a net sales decline in the range of 3% to 5% in the third quarter 2023, compared to previously communicated guidance of a net sales decline in the low - to mid - single digit range compared to the third quarter last year.”
For the full year, “the company is also reaffirming previous guidance for full year 2023 which forecasts net sales to decrease in the low-single digit range compared to last year and the adjusted operating income rate to be in the range of 5% to 6% of net sales.”
In its investor presentation, Victoria’s Secret revealed that its annual sales are currently about $6.2 billion (for the year ended July 29, 2023). This contrasts with sales of $6.785 billion for the full year 2021 and $6.344 billion for the full year 2022. Currently it stated that about 35% of sales are through e-commerce. As the number one U.S. intimates brand it claimed a 20% market share. And as of August 30, it reported 1,375 global company and partner owned store locations in about 65 countries.
In recent years Victoria’s Secret marketing was widely criticized as being overly sexy, as exemplified in its model Angels and annual fashion show, causing it to eliminate both. CEO Waters noted in August, 2022, for example, how pleased he was about the “repositioning of the brand,” adding that “after years and years and years of tarnishing the brand, I would say 99% of what we have done in the last period has polished the brand.”
But in an acknowledgment that the decline in sales could indicate the company had gone to far, the word “sexiness” returned in several places during the investor day. The investor presentation declared, in one place: “We will be at the leading edge of what sexy means today,” adding that “We provide the best products to help women express their confidence, sexiness and power,” though cautioning, “We use our platform to honor the extraordinary diversity of their experiences.” And in discussion with investors, Victoria’s Secret and Pink brand president Greg Unis reportedly emphasized: “Sexiness can be inclusive,” and “Sexiness can celebrate the diverse experiences of our customers and that’s what we’re focused on.”
In reporting on the investor event in the days following, various media outlets jumped on the reversal. Fox Business jeered with the headline: “Victoria’s Secret ditches prioritizing wokeness over ‘sexiness’ after sales drop,” adding “Lingerie chain Victoria’s Secret is reportedly ditching its woke, feminist makeover of recent years as it hasn’t translated to business success.” UK’s Guardian snickered, “Sorry, Victoria’s Secret, your ‘woke’ rebrand failed,” adding “The lingerie brand’s feminist makeover was not only hilarious but so late to the party and hypocritical that no one bought it.”
Waters conceded that “the harsh reality is that the most important aspect of the work that we had to do in 2023, which was strengthening the core of the company, by which I mean our sales for Victoria’s Secret and Pink in North America, are not where we need them to be.”
Another important way the company plans to increase sales is to expand its offerings in several categories beyond intimates and sleepwear. This includes adding more swimwear and activewear, as well as more loungewear, dresses and other outerwear.
The discussions of how management plans to grow Victoria’s Secret going forward focused on “strategic growth drivers,” such as “new customer-centric brand articulations to target primary customers;” “serving the style needs of all women by reinvigorating core products and refocusing and expanding the category lens” beyond lingerie; creating “brand heat” and amplifying “cultural connection by thinking like a product-led entertainment brand, expanding reach through product launches and frequency of newness and reorganizing the sources of the stories that we tell;” and translating “its understanding of customers “through insights and connected data into world-class seamless customer experiences.” — NM
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