Victoria's Secret to close 53 stores as poor Christmas sales bite
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But its reticence to change has been made even more pronounced with the emergence of competitors like Rihanna’s lingerie company Savage X Fenty, American Eagle Outfitters Inc.’s Aerie and ThirdLove, which aim to be more inclusive of women of different shapes, sizes and backgrounds. The road only gets harder from here: Major retailer Target Corp. announced earlier this week plans to launch three new private-label brands specializing in low-cost underwear and sleepwear.
A weak holiday quarter only heightened the need for change. Comparable sales were down 3 per cent at the retailer, dragged down by a 7 per cent decline from in-store sales. Its PINK brand, once a favorite of younger shoppers, saw a low-double digit same-store sales slide in the fourth quarter, while lingerie was flat in what’s normally a big gifting period. Across all categories, increased discounting intended to drive traffic meant margins took a major hit.
On the back of the tough quarter at Victoria’s Secret, L Brands said it sees total company profit, excluding some items, in a range of $US2.20 to $US2.60 this year. That’s well below the average estimate from analysts. Late last year, the company announced it would slash its dividend in half, a move Wall Street called surprising but prudent.
“The outlook illustrates that the lingerie-sales struggle will persist until the retailer finds a way to reconnect with shoppers on price, product and image,” Bloomberg Intelligence analysts Poonam Goyal and Morgan Tarrant wrote in a note. “Investments in VS’ e-commerce site and employees crimp margin but are vital to success.”
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