As usual, L Brands numbers show a tale of two companies. Bath & Body Works put in a blistering performance of 8% comparable growth, while Victoria’s Secret posted a highly negative drop of 6% in comparable terms. When combined, this pushed total comparable sales for the group down by 1% for the second quarter.
The results from Victoria’s Secret are particularly disappointing, especially as the company has been actively improving ranges and trying to inject more fashion into its product mix. However, we do not necessarily believe this indicates the company is on the wrong track. Among existing customers of Victoria’s Secret, we believe the changes have been well received. However, one of the issues is that some shoppers are still drifting away from the brand and, as of yet, Victoria’s Secret has not won back much of the trade that it has lost over the past few years.
Such a win-back will only come with time and more of an effort to recast the brand image of the firm. Fortunately, we believe that management has now started to understand this – hence its hesitancy on initiatives such as the annual Fashion Show. That said, the lack of clarity about whether not the show will go ahead underlines the fact that Victoria’s Secret still doesn’t have a clear view as to what it actually wants to stand for, let alone how it will go about executing such a change.
Until such clarity emerges, we believe performance will continue to suffer. The brand is still not connecting and resonating with large swathes of its target market. Indeed, in our view, Victoria’s Secret continues to be tarred with the negative connotations that surround its overt sexuality and its focus on airbrushed glamor.
Standing in marked contrast to Victoria’s Secret is Bath & Body Works. The company's wholesome brand image and its focus on small indulgences is paying real dividends. One of the main strengths is range development where seasonal lines and takes on hot trends like aromatherapy are driving repeat visits from consumers as well as lifting basket sizes. The integration of the White Barn concept in some refurbished stores is also proving to be successful and we believe that there is much more potential for Bath & Body Works to develop its home scents and candles business.
From our customer data it is also clear that Bath & Body Works is popular due to the value for money it affords. Many items feel premium but are sold at very reasonable price points, something that generates loyalty and bulk purchasing. On top of this, regular promotions also help to drive volumes through the business.
Ultimately, success at Bath & Body Works stems from the fact that the team is much more attuned to the market and consumer trends than is the case at Victoria's Secret. Indeed, the cultures at the two divisions could not be more different, and we believe that Victoria's Secret should take a leaf out of its sister brand's playbook as it looks to reinvent itself.