L Brands (LB) : Victoria’s Secret, #Metoo, lower mall traffic hurting demand

   09 Oct 2018

For the 2000s Victoria’s Secret (LB) brand was synopsis with sexy lingerie and affordable luxury.  Heavy spend on mega supermodels and traditional media as well as brightly lit stores in malls across America kept the brand relevant.  However, in recent quarters our data ensemble has revealed the brand continues to lose relevance.  Perhaps due to a combination of declining mall traffic, increased #MeToo scrutiny and more economical online competition explain why our metrics have failed to stabilize.

Our social media data analysis indicated a steep loss in overall volume of Victoria’s Secret mentions as well as more negative reactions and an increasingly negative skew of commentary among consumers.  We also focused on longer-term diminished reaction and online interest in the Annual Fashion Show, which has translated to weaker demand over the critical holiday shopping weeks.

Another primary data set we utilize to analyze consumer demand, email sending volumes, indicated Victoria’s Secret was increasingly pushing out discounts and promotions to its lead list at a much greater frequency than prior years.    Our hypothesis with the requirement of greater “pushing” of offers during peak seasonal sales, was that product was not moving.

Lastly, our web panel data gave us unique insight into how effective certain online promotions and sales were at driving actual online transactions.  Concerningly, despite more aggressive promotional activity, click through to purchase URLs was actually declining compared with the prior year.

In aggregate, our data ensemble was signaling very troubling trends for LB.  This proved accurate as the Victoria’s Secret brand has reported flat or negative comps, declining margins and management has continued to reduce its earnings outlook.    Shares have declined more than 50% since Random Walk identified the potential inflection in mid-2017.

 

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