Critical analysis paper

Business News: Victoria's Secret Misses Out on Retailing's Surge Safdar, Khadeeja . Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Aug 2018: B.3.

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FULL TEXT The booming economy has boosted sales for many retailers. Victoria's Secret isn't among them.

The lingerie brand reported lower comparable sales for the latest quarter, dragging down results at its parent

company, L Brands Inc. The company also said comparable sales declined at teen brand Pink, which is part of

Victoria's Secret, and that Pink's leader would be leaving at the end of the year.

Analysts on a conference call Thursday peppered executives with questions about the Victoria's Secret marketing

message, softness in the Pink business and the company's heavy use of discounts.

Jan Singer, head of the Victoria's Secret lingerie business, defended the company's strategy, saying that the most-

recent additions to the product lines are performing well. "What's new in the assortment is what's working," she

said.

Shares in L Brands fell 11% to close at $28.25 Thursday.

Since she joined Victoria's Secret, Ms. Singer has launched bra styles emphasizing comfort and fit, in an attempt

to appeal to shoppers looking for more natural looks. But the company has continued to struggle. The latest

results come as a robust U.S. economy is spurring more people to open their wallets, boosting retailers as diverse

as Home Depot Inc. and Nordstrom Inc. Walmart Inc. and Target Corp. both delivered their best quarterly

performances in years.

Victoria's Secret was once a top performer in the retail industry, powering years of growth with images of busty

models at its more than 1,000 largely mall-based stores. Two years ago, L Brands CEO Leslie Wexner took charge

of the brand and announced changes that were intended to ensure it didn't suffer the same fate as other specialty

brands.

He exited the lingerie brand's swimsuit business and doubled down on sports bras to address the rise of the so-

called athleisure trend. Mr. Wexner later hired Ms. Singer to help execute the strategy.

The brand is still struggling as young consumers now prefer more authentic marketing and garments that

resemble crop tops, with simple sizing and lower prices. It is also facing new competition from niche competitors

and entrants such as American Eagle Outfitters Inc.'s Aerie brand, which uses more natural-looking models.

Despite resorting to heavy promotions, Victoria's Secret has struggled to draw customers to its stores. Recently,

those troubles have spilled over into Pink, once a bright spot that drew in younger customers before they

transitioned to Victoria's Secret.

Analysts say the company has had plenty of time to execute on its strategy and it has become more apparent that

its plans haven't played out.

"The biggest surprise is Pink, which was once a quiet but powerful driver," said Simeon Siegel, an analyst at

Nomura Instinet. "We're now seeing it hitting a ceiling."

L Brands said Pink CEO Denise Landman will leave the company later this year and be succeeded by Amy Hauk, a

merchandising executive at Bath &Body Works. On Thursday, Ms. Landman said the brand is still popular among

college-age women. "I do not think, nor do I think anyone in this room believes, that Pink has lost its ability to

connect with customers," she said.

Comparable sales at Victoria's Secret declined 1% in the second quarter from a year earlier, and the brand's

merchandise margin rate fell across all major categories as the company used promotions to clear inventory.

Nearly half of the stores run by L Brands, which also owns Bath &Body Works, are also in second- and third-tier

malls. In an interview earlier this year, Mr. Wexner defended the large fleet of mall-based stores, saying that the

demise of bricks-and-mortar locations has been overstated.

For the year, L Brands lowered its earnings-per-share guidance from between $2.70 and $3 to between $2.45 and

$2.70. It predicted third-quarter earnings per share between zero and 5 cents.

Credit: By Khadeeja Safdar DETAILS

Subject: Earnings per share

Location: United States--US

People: Singer, Jan Landman, Denise Wexner, Leslie

Company / organization: Name: Target Corp; NAICS: 452112; Name: Nordstrom Inc; NAICS: 448140, 448210,

452111; Name: Home Depot Inc; NAICS: 444110; Name: American Eagle Outfitters

Inc; NAICS: 448110, 448120; Name: L Brands Inc; NAICS: 424210, 448120; Name:

Bath &Body Works; NAICS: 446120; Name: Walmart Inc; NAICS: 452112, 452910,

454111

Publication title: Wall Street Journal, Eastern edition; New York, N.Y.

Pages: B.3

Publication year: 2018

Publication date: Aug 24, 2018

Publisher: Dow Jones &Company Inc

Place of publication: New York, N.Y.

Country of publication: United States, New York, N.Y.

Publication subject: Business And Economics--Banking And Finance

ISSN: 00999660

Source type: Newspapers

Language of publication: English

Document type: News

ProQuest document ID: 2092370779

Document URL: https://search.proquest.com/docview/2092370779?accountid=14270

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Last updated: 2018-08-24

Database: ABI/INFORM Collection,US Newsstream