Fast forward a year, things look a lot different for Victoria’s Secret and L Brands.
“I think most people probably doubted their ability to recover after what was a really challenging three to four years,” said Janine Stichter, a retail analyst at Jefferies. “But they’ve done it.”
Despite the turnaround, Victoria’s Secret still has work to do winning back consumers it lost in recent years and fending off upstart bra brands, say analysts.
“The future of Victoria’s Secret looks like more inclusive branding, which is going to be a long road for them,” said Erin Schmidt, a retail analyst at Coresight Research. “Inclusivity is not something that you can simply tack on to a product or to a marketing campaign. Consumers are demanding that they see that within the internal corporate structures and the supply chain.”
Cora Harrington, author of “In Intimate Detail: How to Choose, Wear & Love Lingerie” and founder of the blog The Lingerie Addict, said Victoria’s Secret needs to expand its bra and underwear sizes to appeal to a broader group of consumers.
Offering a range of sizes “makes people feel like there’s something there for them and encourages people to visit the site, shop the site and share things with their friends,” she said.
Harrington also noted that plus size models are still not featured as prominently in Victoria’s Secret marketing as competitors such as Rihanna’s Savage X Fenty brand.
“It’s interesting to see Victoria’s Secret pick up little bits and pieces of where the industry is moving, but somehow still be reluctant to go all in in some pretty significant ways,” she said.
Victoria’s Secret did not respond to request for comment on Harrington’s criticisms.
What went wrong at Victoria’s Secret
Victoria’s Secret’s sales dropped to $5.4 billion in 2020 from $7.7 billion in 2015. Analysts attribute this decline to Victoria’s Secret’s struggle to adapt to consumer demand for more custom-fitted bras and its brand messaging and advertisements.
“It was all push-up bras that were made for not necessarily what women want to wear, but made for what [Victoria’s Secret] thought men would want,” said Stichter from Jefferies.
“They were just kind of stuck with the same marketing message that they had for years. And that didn’t really resonate anymore,” Stichter said.
Victoria’s Secret was also damaged by scandals surrounding corporate leaders and workplace culture.
“Why not? Because the show is a fantasy,” Razek said. Razek later apologized for his “insensitive” comments. He left the company in 2019.
In stores, Victoria’s Secret had also relied on heavy promotions to draw customers and clear out unsold bras and underwear sitting on shelves, hitting profit margins. “The inventory got too high and the pricing completely collapsed,” said Stichter.
Victoria’s Secret’s rebound
More recently, Victoria’s Secret has been shifting its marketing, and it’s paying off, say analysts.
“We’re moving from sexy for a few to sexy for all,” Martin Waters, CEO of Victoria’s Secret, said on a call with analysts last month. “It’s about including most women rather than excluding most women and being grounded in real life rather than mostly unattainable.”
This repositioning was a dramatic departure for Victoria’s Secret and it’s taken time to shift consumer perceptions, said Coresight’s Schmidt.
“For a brand that has had its challenges both within the internal part of the organization and externally, this is a tremendous change for the consumer,” she said.
Victoria’s Secret has also expanded its bra assortment, said Stichter. It’s selling more bralettes and unwired bras instead of push-up bras, and it’s offering fewer markdowns. Victoria’s Secret’s profit margin was up more than 10 percentage points during the three months ending May 1 this year compared with the same period in 2019.
“They’ve been promoting much more minimally. Pricing is back to where it was before they started to spiral downwards,” Stichter said.
“The business has gotten much better than anyone would have expected,” she said.
Correction: A previous version of this article misspelled Jefferies retail analyst Janine Stichter’s name.