As sales drop, retailer adds 20 locations to six already closed this year.
Victoria’s Secret is almost a national pastime, with their annual sale causing shoppers to hit the mall in droves, and their annual fashion show causing a stir every year. But Business Insider reports that the popular retailer is closing 20 locations amid lagging sales this year.
The announcement was made on a conference call by Stuart Burgdoerfer, the Chief Financial Officer of Victoria’s Secret’s parent L Brands. Six stores have already closed this year, but the announcement did not include details about which other stores would be following suit.
Sales for the retailer were down by almost 1 percent, as reported on the call. L Brands Inc., the parent company, also includes the Pink brand sold at Victoria’s Secret and in other retail locations. CEO of Pink Denise Landman just announced that she will be retiring at the end of this year, Bloomberg reports.
Bloomberg also reported that shares for the company’s stock fell following the announcement that Landman was leaving and that the brand was cutting its profit forecast. Shares fell by nearly 6 percent to $30.80 by late in the trading day. The lingerie juggernaut has had recent success with Pink, which sells loungewear and underwear popular with the college-age crowd.
But even Pink’s success may not sustain the brand’s sales as Victoria’s Secret continues to face competition from other brands and startups, and the brand has started offering deep discounts.
Jefferies analyst Randal Konik said Pink has helped the brand increase sales, but that recent discounts are a troubling sign.
“It shows how desperate the company is to drive consumer traffic and also shows how soft demand for Pink has become,” Konik wrote in an Aug. 20 note to clients. “Pink was never promoted like this in the past and the risk ahead in our view is Pink becomes the next Juicy Couture.”
Landman’s replacement, Amy Hauk, isn’t inspiring confidence either. Hauk is currently the head of merchandising and product development at Bath & Body Works, which is also under the umbrella of parent company L Brands.
Some feel an executive without expertise in the clothing and lingerie space is not going to be of any help in solving the brand’s issues. Competitors like Aerie are posting healthy sales, while Pink and Victoria’s Secret seem to be struggling. Not everyone is confident that Hauk will have the expertise necessary to bolster the brand. It’s definitely a situation investors will be keeping a careful eye on.
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