In 2016, Victoria's Secret made the somewhat controversial decision to abandon its seemingly popular swimwear and apparel categories to focus solely on lingerie, beauty and the Pink brand. The company's reasoning seemed to be that those categories weren't performing as well as others, and it would be prudent to narrow its focus to core products. However, for the entirety of fiscal 2017, the decision has only hurt the brand's sales.
As pointed out by WWD (which we double-checked with parent company L Brands' earnings reports), Victoria's Secret comparable sales declined every single month last year. Things were worse in the first half of the year, with declines between 10 and 14 percent most months. Towards the end of the year, those declines shrank slightly to the single digits. Released on Thursday, comparable sales for the 48 weeks ending in December declined 5 percent for Victoria's Secret. The exit of swim and apparel was again blamed.
Any time a company exits a category that was a significant part of its business, sales declines are inevitable — but a year and a half later? In a brief conference call with investors, Chief Investor Relations Officer Amy Preston said that growth in the beauty and Pink categories was "more than offset" by a decline in lingerie sales.
Over the past year, competition in the affordable lingerie category has only intensified: Madewell launched a full intimates line, while American Eagle's Aerie has continued to gain market share. Meanwhile, innovative lingerie startups like True & Co. and Lively continued to attract investors and buyers. Victoria's Secret may need to think beyond its formulaic annual fashion show and bralette activations at Coachella to keep up. Maybe hiring a plus-size model or two would be a good place to start?