Lingerie icon Victoria’s Secret is to close 20 stores this year: the tide is turning for the lingerie brand, which is under huge pressure from competitors.
Shrinking profits for parent company L Brands
Following disappointing quarterly reports, parent company L Brands announces that Victoria’s Secret will dispose of twenty stores this year. Six of these stores were closed earlier this year, so fourteen have yet to be closed. Which shops are closing is not made public as of yet.
The entire L Brands group generated a turnover of 2.98 billion dollar (2.5 billion euro), a sharp increase compared to 2.75 billion dollar the previous year. However, the gross profit did suffer in the second quarter, dropping from 300.9 million to 288.1 million dollar (195 million euro). Ultimately L Brands achieved just under 100 million net profit, compared to 138.9 million dollars last year. For the second time this year, the group then decreased its annual forecast.
Victoria’s Secret bleeds in price battles
The culprit is sexy subsidiary Victoria’s Secret, whose sales dropped by 1 % in the existing stores. Sub brand Pink is having a particularly hard time. The lingerie chain is facing fierce competition from other and new brands, which forced it to engage in substantial price promotions. Analysts fear, however, that these discounts do more harm than good to the image of sensual Angels’ brand. On social media Victoria’s Secret is increasingly criticised for always using perfect looking models.
Denise Landman, one of the people that built Victoria’s Secret and CEO of Pink, has drawn her conclusions: she retires and is replaced by a former manager of the American chain Bath & Body Works.
