Victoria’s Secret’s Resurgence

Victoria’s Secret Maps Its Comeback

Victoria’s Secret (VSCO) shares have climbed since it went public as a standalone company last week. After suffering years of declining sales as part of L Brands (LB), Victoria’s Secret is overhauling its marketing and streamlining operations in hopes of turning around the brand. Investors seem to be enthusiastic about the brand’s initiatives.

Despite the surge in its share price, Victoria’s Secret is still trading at a big discount compared to its rivals in the undergarment market like Hanesbrands (HBI) and American Eagle Outfitters (AEO). That implies there could be room for appreciation if Victoria’s Secret’s strategies pay off.

Streamlining Operations

Victoria’s Secret made the decision to retire its trademark angels, replacing them with appointed brand ambassadors. The company is also naming a new board made up almost entirely of women. These moves have garnered a lot of attention for the retailer.

The company is also working to make its operations leaner in order to strengthen its balance sheets. Victoria’s Secret has been shedding underperforming stores, changing its marketing message, reducing the amount of inventory it holds, and scaling back promotions. The company also repurchased its swimwear business and is now selling maternity undergarments and shapewear. These strategies are designed to reduce operational costs and boost sales.

Victoria’s Secrets Bets Pay Off

So far, Victoria’s Secret’s initiatives seem to be paying off. In its fiscal first quarter, the company’s sales were higher than pre-pandemic levels despite the fact that the brand closed 241 stores last year. Operating margins were 15% in the quarter compared to 1% in 2019. It has also been able to maintain its number-one position in the women’s underwear market despite competition from upstarts which have been quicker to embrace inclusivity. With $350 million slated for marketing this year, it has a lot of firepower to maintain that lead and spread a more inclusive message to consumers.

Victoria’s Secret is working to regain strength after years of declining sales. It will be interesting to watch as the brand continues to build its business on its own terms.

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