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Victoria’s Secret will reboot its fashion show this year as turnaround gains traction

Published March 3, 2023

By: Daphne Howland

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Dive Brief:

  • Noting that sales volatility has continued into the first quarter in North America, its largest market, Victoria’s Secret & Co. on Thursday said that Q4 net sales fell 7% year over year to $2 billion. Comps were down 7% in stores and 6% when including e-commerce.

  • Adjusted gross margin contracted by 160 basis points to 37.6%, mostly due to promotions, especially at peak holiday times, according to an earnings presentation. Net income fell 17.5% to $203 million.

  • After a four-year hiatus, Victoria’s Secret will once again hold its fashion show this year, executives said Friday. The brand ended the event in 2019 as criticism of its marketing techniques increasingly came under fire and as the #MeToo movement gained strength.

Dive Insight:

Victoria’s Secret has a ways to go in its turnaround, a sharp marketing reversal toward more inclusive, female-empowerment messaging and merchandising. But it has apparently come far enough to reboot its once infamous fashion show. 


“We believe we’re two years into a five-year journey in the turnaround of our business, and we have a clear roadmap to be the world’s leading fashion retailer of intimate apparel,” CEO Martin Waters said on an earnings call.


When it comes to revenue, the company has remained the market leader in intimates, even as competition intensified in recent years, Wells Fargo analysts noted. But smaller brands will continue to chip away at its dominance because the company hasn’t made the progress it needs to, according to Jane Hali & Associates analysts.


“Although [Victoria’s Secret & Co.] is working through its turnaround and notably becoming more in tune with consumer interest, we feel the execution isn’t on par with the rest of the competitive landscape,” Hali analysts said in a client note, adding that the company “is having to play catch-up when it comes to image, product, and experience. While in the short-term we might see improvements, we believe collectively the DTC brands will continue to take share.” 


Specifically, while recent collections are stronger, with better designs, fabrics and compositions, “we are still seeing non appealing and non-competitive product in the intimates space,” they said.


There’s more progress to be made operationally as well, with potential for more changes to both location and the store-based customer experience, according to Wells Fargo analysts led by Ike Boruchow.


“It is undeniable that VS has a massive [North American] store base (800+ stores) highly exposed to mall-based real estate,” Boruchow said in emailed comments, noting an “opportunity in off-mall real estate.”


In North America last year, the company opened 16 stores, mostly off mall, and closed 13; seven stores were renovated using its Store of the Future design, bringing that concept to a total of 25 locations. This year, the company expects to open 15 to 20 new Store of the Future locations, mostly off mall, and close about the same number; it will also renovate another 50, Waters told analysts Friday. The company uses some of those renovations to downsize its presence in a shopping center, in some cases by combining Pink and Victoria’s Secret into one location.

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