Victoria's Secret Losing Customers: Market Analysts Sound off The Alarm
Victoria's Secret losing customers might come as a shock to you, but the company has been hit hard by quality complaints and plummeting sales
Let’s be honest, we all love watching the famed Victoria’s Secret shows. The angels–as the supermodels are called–are often the biggest attraction. Perhaps, even bigger than the lingerie they model down the runway. But it seems nobody wants to know Victoria’s Secret anymore. Because recent numbers suggest that Victoria’s Secret losing customers is now very much a reality.
Owner L Brands Inc. reported a huge drop in the company’s sales, especially in the month of June. While Victoria’s Secret comparable sales reportedly fell by 1 percent in June, its store-only comparables fell by 6 percent. These numbers were said to be partially responsible for the more than 11 percent drop that L Brand suffered in July.
This, despite the fact that the lingerie company extended its semi-annual sale and deepened price cuts.
Victoria’s Secret Losing Customers: Sales Continue To Go Down
Talking about the plummeting numbers, Jefferies’ analyst Randal Konik noted that “It is game over for Victoria’s Secret.”
The lingerie brand has consistently been losing customers, especially to American Eagle Outfitters’ Aerie. So much so that it completely turned to discounts and promotions to turn itself around. This constant struggle to keep up has been touted as the primary reason for L Brand’s 45 percent sales drop just this year.
Konik added that the sexy lingerie makers have suffered “massive traffic declines, zero pricing power and market share losses mounting.” However, he said investors have more or less ignored the numbers on the field and they continue to believe that Victoria’s Secret is a “great” brand.
Konik added all these observations to a note he sent to clients after the company’s recent sales numbers were released.
The analyst also shared his observation about L Brand’s other brand called Pink has cleverly hidden its plummeting numbers to safe guard Victoria’s Secret. “The truth is, Pink growth has ended, as well,” Konik categorically stated.
“Even PINK is seeing comps decline for a number of months now which shows us the customer has moved on,” he added.
Bloomberg reported that in his note Konik even stated that there is “little value” that is left in Victoria’s Secret and Pink. He also added that he foresees the risk of the total segment of EBIT dollars. “With Ebitda dropping below $500 million in the medium term,” Bloomberg noted.
This news comes close on heels of reports that customers flooded its Facebook page with complaints about its cheap make.
Victoria’s Secret Losing Customers Also Because Of “Cheap” Goods
“I used to love this place… until the underwear I bought fell apart after two gentle washes,” one shopper wrote on Victoria’s Secret’s Facebook page.
“You changed the manufacturing of one of the best bras I’ve ever worn. Your full coverage bra with underwire was an amazingly comfortable bra until you ruined it with cheap construction and thin fabrics. But, of course, the price remained the same,” another shopper complained.
Shoppers ever shared that they saw similar downgrade in the brand Pink.
“Bought 3 different pairs of pants in less than a year, and all 3 had defective seams and were torn after a couple of washes on the ‘Delicate’ cycle of my washer,” one customer thrashed the company on Facebook.
Victoria’s Secret also came under fire for its lack of diversity and turning a deaf ear to the #MeToo movement. It continues to show provocative ads but this in turn has lost it its loyal customer base.
But there is some good news for Victoria’s Secret.
But Company Will Still Yield A Significant Enterprise Value
However, the silver lining for the company is that the company will still yield more than S$13.63 billion enterprise value. This, even though they may see shares dropping to the low of S$27.26.
Looks like there are many fires coming at it from so many directions including plummeting sales and a discontent among costumers. Now only time will tell for how long Victoria’s Secret will be kept alive!