What's wrong with Victoria's Secret?

The owner of Victoria's Secret has appointed a new general manager of the lingerie chain in his latest attempt to revive the company's fortune.

John Mehas, president of the luxury fashion house Tory Burch, will take over in early 2019 replacing Jan Singer.

His appointment comes at a difficult time for Victoria's Secret.

The company is facing a decline in sales, a growing number of competitors and suggestions that the brand – long synonymous with lingerie in supermarkets in the United States – is out of step with fashion.

On Monday, the shares of L Brands, the parent company of Victoria's Secret, lost 5% of their business after normal business hours, as a result of its latest results, which showed another drop in sales of the lingerie chain. The stock price has fallen more than 40% in the last 12 months.

& # 39; Constant decline & # 39;

Ed Razek, marketing director at L Brands, has recently received strong criticism following comments he made to Vogue magazine on transgender and plus size models.

And this weekend, the New York Times proclaimed the name "Victoria's Secret" in "constant decline", while the Wall Street Journal stated that the sex appeal vision defined by the retailer based in Ohio – known for its "Angel" models with big breasts – had lost its charm ".

L Brands manager Leslie H Wexner said the new leaders would look at "everything" to improve performance.

"I am confident that, under the direction of John, Victoria's Secret Lingerie, the world's largest lingerie brand, will continue to play a leading role and provide products and experiences that touch the world's women. whole, "he said.

Nevertheless, with Victoria's Online Sales Secret and in comparable stores, the obituary sales written for the retailer, which began in the 1970s, should not stop.

"They absolutely need a change in their brand positioning to go forward," said Diana Smith, associate director of retail and apparel at Mintel, a company market research.

"I think they're a bit in limbo right now."

The research firm Ibisworld estimates that revenue growth from lingerie stores is expected to grow by only 1% per year over the next five years.

This represents a decline from the annual rate of more than 4% recorded by the industry between 2013 and 2018 – and this is a big problem for L Brands, which currently captures more than 60% of revenues and counts more than 1,000 Victoria & # 39; s Secret stores in the United States and Canada.

Analysts attribute this slowdown in growth largely to competition from online newcomers, department stores and large retailers such as Gap, which are gaining market share.

"Victoria's Secret is still the leader – and the strong leader – in terms of sharing," said Ms. Smith. "It's just that other businesses are starting to offer more opportunities and choices to women, who did not exist in the past."

Companies such as Lively, ThirdLove or Savage X Fenty by Rihanna have differentiated themselves by offering a wider range of sizes – including to a growing number of larger customers – or by focusing on particular products, such as bra without armature.

Falling prices are also part of the call, which analysts say may hurt Victoria's profit margins in the future.

Ibisworld expects the number of lingerie operators in the US to grow at an annual rate of more than 4% over the next five years, more than three times the pace of the industry. of female clothing.

"These small niche operators will only continue to grow and continue to populate the sector," says Claire O. Connor, chief analyst at Ibisworld. "They have a real chance to compete with Victoria's Secret."

& # 39; They will bounce & # 39;

The Victoria's Secret scale means that it has been slow to respond to certain trends, such as the demand for bralettes and triangular bras, categories in which sales have increased by more than 100% in Canada. in the last three months, according to analyst firm Edited.

But Mrs. Smith and others warned that it was too early to write off the mark.

"Most large businesses go through that," said Mintel's Ms. Smith. "I think they're going to bounce back."

Recently, last Friday, at a Victoria's Secret store in Brooklyn, New York, a long line of waiting went through tidy tables stacked with perfumes, pajamas and lingerie.

Both Sahara Jackson and Cheriyah Smith, both 17-year-old lip gloss clients, praised the quality of the brand and offered blank looks when the reporter mentioned some of its competitors online.

And 35-year-old Shurla Kerr from New York doubted that the customers had turned away from the sensual image defended by the brand.

"I think that's the sexy side, that's why people are turning to Victoria's Secret," she said.

While comparable Victoria's Secret sales are down 1% since the beginning of the year, this is an improvement over the 11% drop recorded in the previous year. during the same period in 2017 and a less severe drop than expected by some analysts.

Since April, surveys suggest that customer satisfaction has improved and that the number of women ages 18 to 49 making purchases has increased sharply, according to the market research firm YouGov.

More and more women are also hearing positive things about society through advertising, media and word of mouth.

Ted Marzilli, general manager of YouGov's data products division, said that he thought the company's image had taken a hit when the MeToo movement was at its peak, but that effect was noticeable. 39 is faded.

"I think the information about his disappearance was a bit premature," he said.