Problem-ridden Victoria's Secret, the largest lingerie retailer in the United States and still famous for its Victoria's Secret Fashion Show and the Victoria's Secret Angels supermodels are about to have a new owner.
L Brands (LB), the holding company that owns Victoria's Secret, this week is expected to conclude a deal that will sell the brand to private equity firm Sycamore Partners. Les Wexner, founder, and CEO of L Brands is expected to resign his post after selling Victoria's Secret.
L Brands have been trying to revive Victoria's Secret slumping sales to appeal to a more diverse group of women. The brand mainline includes bras, underwear, lingerie, and sleepwear. It's added new women-inclusive labels to this line and tried different marketing strategies as it tries to transform the brand image from one catering to perfectly-shaped females to one more appealing to women of whatever body shape.
Victoria's Secret keeps struggling to find its footing as women seem to prefer lingerie brands emphasizing inclusion and diversity. Among these competitors are ThirdLove (which offers half-cup sizing) and online startup Lively (founded by a former Victoria's Secret manager) whose bras emphasize comfort over sexiness for women of all sizes.
Women's disenchantment with Victoria's Secret's and its sexy image was reflected in falling revenues over the previous years. Victoria's Secret's same-store sales plunged 7% in the third quarter of 2019.
The 2019 downturn is an extension of sales and marketing problems that came to the fore in 2015. In 2016, direct sales only grew by 1.6% and fell by 7.4% in the last quarter of the year, which is typically a high revenue period due to the holidays.
To shave-off costs, Victoria's Secret discontinued its use of a print catalog and dropped certain categories of clothing such as swimwear. The moves didn't have the desired effect and revenue continued to stagnate and drop in early 2017.
CEO Jan Singer resigned in November 2018 amid slumping sales. It was reported that quarterly same-store sales over the last two years increased only once. In 2019, the company announced the closure of 53 U.S. stores after the company's stock market price plummeted 40% in a single year. On November 21, 2019, the company said its Victoria's Secret Fashion Show would no longer take place.
"We think it's important to evolve the marketing of Victoria's Secret," said Executive Vice President Stuart Burgdoerfe at the time. "There will be more to come as that continues to get evaluated."
