Bralettes pose challenge to Victoria's Secret structured approach to lingerie
Higher-priced, push-up bras have always been the bread and butter for Victoria’s Secret. However, the emergence of athleisure and millennial consumers' preferences for unstructured bralettes and sports bras might be forcing a few changes in the Victoria's Secret product strategy.
Last week parent company L Brands announced a 25.8 percent drop in its third-quarter earnings. During the conference call on its financial results held November 17, analysts wondered aloud if the brand is overly relying on its core product of structured lingerie.
Asked by analysts if if the structured bra business was in decline, Stuart Burgdoerer, chief financial officer and executive vice president of L Brand said there was no indication that the segment was “‘getting worse’ by any stretch.”
He also said: “We're pleased with our growth, extraordinary growth frankly in the bralette and sports bra business intentionally driving trial and unit growth. And as I've mentioned we're confident that over time we'll get the right balance as it relates to dollar growth and rate in those categories and in the overall bra business for Victoria's.”
L Brands recent weak quarterly results comes after a year of change-ups for Victoria’s Secret. L Brand brought on Leslie Wexner to take over Sharon Jester Tourney’s position as chairman and chief executive officer in February. One of Wexner’s first acts on the job was to cut Victoria’s Secret apparel and swim lines, focusing instead on their core categories of higher-priced, structured bras. Wexner found that the brand was spreading itself too thin, and hopes that focusing on a core product will form a tighter base for the brand to grow from.
Consumer trend show that millennials are favoring the unstructured bralettes and sports bras over the traditional structured push-up bra, helped by the fact that sports bras and bralettes are priced much lower, between $20-40, compared to structured bras, which generally retail from $50-70 at Victoria's Secret.
Victoria’s Secret saw a comparable sales decline of 2% in 2016, compared to a 5% drop in 2015. Earnings per share fell 24%.Victoria’s Secret contributed $1,548.1 million to L Brand’s total sales, in comparison to $1,567.5 million in the 2015 third quarter.
Wexner has previously told analysts that L Brands is at an ‘inflection point”. The company is expecting to see Victoria’s Secret revenues grow up to 10% by next year due to this new refocusing. Stocks rose for the company, jumping up 2.5 percent to $69.64.
L Brands is an American based retailing company that houses Victoria’s Secret , Bath &Body Works, Henri Bendel, and La Senza. Victoria’s Secret is L Brand’s flagship brand, accounting for 63% of revenue in 2015.
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