Victoria’s Secret is diving back into swimwear in many of its physical locations.
The lingerie giant, which is owned by L Brands Inc., began selling swimwear online in early 2019 after a three-year vacation from the category. Now, swimsuits from the brand’s heritage collection, along with new styles and extended size offerings (up to 38 DDD and XL in some pieces), will be available in select stores.
Brands such as Ayra Swim, Baobab, For Love & Lemons, Monica Hansen Beachwear, Roxy, Skinny Dippers and Vitamin A Swimwear can also be found on the company’s website. In addition, the 2021 Swim “Magalog” will be available after March 1.
Victoria’s Secret ended its swimwear business, along with the popular catalogue, back in 2016 in an attempt to focus on its core lingerie division. But the move ended up costing the innerwear brand roughly $525 million in annual sales.
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Meanwhile, top-line revenues throughout the entire business were dwindling as consumer preferences shifted to less sexy, more comfort-focused intimates brands. At the same time, Victoria’s Secret remained embedded in scandal, first with L Brands’ former chief marketing officer Ed Razek — and mastermind behind the Victoria’s Secret Fashion Show — for making derogatory comments on plus-size and transsexual models, and then with L Brands founder Leslie H. Wexner’s ties to registered sex offender Jeffery Epstein. The company was also slow to close its unprofitable stores, draining Victoria’s Secret of even more resources.
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But the innerwear brand has been in recovery mode for the last 18 months. L Brands, which also owns the Bath & Body Works brand, unveiled plans to sell the Victoria’s Secret business — including the Lingerie, Beauty and Pink divisions — in February 2020 for $525 million to private equity firm Sycamore Partners.
The deal fell through amid the pandemic, however. Three months later, the company said it would take Victoria’s Secret private, unlocking value in the lucrative Bath & Body Works brand as it stands alone on the public market.
Victoria’s Secret has also added a string of senior-level hires over the last few months to help turn the business around and has updated the assortment and marketing materials. It has also sold a majority stake of the Victoria’s Secret U.K. business to Next plc and closed hundreds of unprofitable stores to make way for more lucrative markets, such as Milan and Israel.
“All options, including a spin-off of the Victoria’s Secret business into a public company or a private sale of the business, are being evaluated,” the company said earlier this month.
Shares of L Brands, which closed up 4.24 percent to $49.22 a piece Tuesday, have risen more than 104 percent in the last year.
“The Victoria’s Secret division (58 percent of sales, pre-COVID-19) has been in persistent decline, donating [market] share with eroding margins over the last [roughly] 4 years. However, while COVID-19 creates some challenges in evaluating underlying fundamentals, the division appears to have found a bottom, with sales declines and margin compression moderating,” Janine Stichter, equity analyst at Jefferies, wrote in a note. “Most notably, improved inventory control is allowing for a reduced promotional posture, while expense reductions and store closures are driving significant reductions to the fixed cost base. Changes to marketing and merchandising appear to be having a modest impact, although we still see a long road ahead for the brand.”
The company will report quarterly earnings on Feb. 24 after the market closes.
