American fashion retailer L Brands has cancelled its 2019 Victoria's Secret Fashion Show. Its EVP and CFO?Stuart Burgdoerfer said during a recent earnings call that "it is important to evolve the marketing of Victoria's Secret". "We will be communicating to customers, but nothing that I would say is similar in magnitude to the Fashion Show," he said when asked about Victoria's Secret's plans for the holiday season.
During the call,?Burgdoerfer said while the timing has shifted over the years in terms of the airing of the Fashion Show, it did not see specific material impact on short-term sales response to the airing of the Fashion Show.
"It did air at different times over the years and we didn't see a material impact on the next few days results. With that said, it was a very important part of the brand building of this business and was an important aspect of the brand and a remarkable marketing achievement," he explained.
According to him, that is among the areas that Victoria?s Secret Lingerie chief executive officer John Mehas, who was appointed last November, is focused on. The cancellation comes as L Brands announced that third quarter sales for Victoria's Secret dropped by 7% to US$1.412 billion, including an 8% year-on-year decline in store sales, driven by declines in traffic and average unit retails. Total digital sales for Victoria's Secret decreased by 6%.
"Given the decline in performance at Victoria?s Secret, we have substantially pulled back on capital investment in that business while we focus on ensuring that our merchandise resonates with customers," L Brands said in its latest financial statement.
According to the company, third quarter sales for Victoria's Secret's lingerie business "were down low double-digit and merchandise margin rate declined". PINK, Victoria's Secret lingerie line for younger women, saw sales decrease in the mid-single digit range, an improvement from the second quarter decline of low double-digits, L Brands said in the financial statement.The PINK merchandise margin rate was down significantly in the third quarter, driven by sharper opening price points and an increase in promotional activity.
Meanwhile, Victoria's Secret Beauty's third quarter sales increased in the low single-digit range due to growth in prestige fragrance, driven by a strong launch of Bombshell Intense, the mist collection, and PINK beauty. L Brands said as it is up against aggressive promotional activity from last year this holiday season, it will continue to remain agile?in reading the business and respond with appropriate promotional activity to drive traffic and manage inventory levels while optimizing our margin dollar result.
In May this year, Victoria's Secret announced it will stop airing its?annual fashion show on network television after almost two decades. L Brands chief executive?Leslie Wexner previously stressed on the need for the brand to evolve, adding that it will?develop a new kind of event on different platforms in the future.
Meanwhile, Burgdoerfer said during the recent earnings call that L Brands recognises and appreciates that the communication of the brand, the offerings,?the emotional content of Victoria's Secret "is obviously an important thing". As such, he expects that L Brands will have evolution of those aspects over the next six to 12 months, and with?Mehas focused on those areas. According to him, as the marketing of the Victoria's Secret continues to be evaluated, L Brands believes that the most important thing is the quality of the merchandise itself, as well as the quality of its execution in selling in stores and online.
(Photo courtesy: Victoria's Secret Facebook page)