The consumer is all right for L Brands Inc.’s Victoria’s Secret and Bath & Body Works.
“Price points and average transaction sizes at Bath & Body in store is about $25, $26; at Victoria’s Secret in a store, it’s a little over $50,” said Stuart Burgdoerfer, the company’s chief financial officer and executive vice president.
“In terms of the health of that consumer, we think pretty good, at the end of the day,” Burgdoerfer said. “Employment is up in the United States. People are enjoying the benefit of lower gasoline prices, etcetera. And so, all in all, we think the consumer is pretty healthy. We know that there are some counterindications to that, but what we’re seeing in our business, again, pretty steady and pretty healthy.”
Burgdoerfer was speaking to investors and analysts at the Bank of America Merrill Lynch Consumer and Retail Technology Conference and said that absent a significant hit to the economy, the company should perform “pretty well.”
The company very much feels that its future is in its own hands and Burgdoerfer said the determining factor for performance is how well L Brands executes on its strategy.
At Victoria’s Secret, the day-to-day of the business is set to change, at least slightly, after chairman and chief executive officer Leslie Wexner assumed direct control last month, taking over from Sharen Turney, who left the company.
Burgdoerfer said Wexner and “a few people that work with him pretty closely, including me, are spending more time at Victoria’s Secret. I would just say that we’re looking at fundamental things. First of all, Victoria’s Secret is a terrific business. So the last thing you want to do is change too many big things at once because you don’t want to break or go backwards on what is a very, very successful business. But with that said, fresh eyes bring fresh thinking.”
Fresh thinking is what Wexner is known for. He’s successfully navigated retail for over 50 years by changing tack when necessary, largely dropping out of apparel, for instance. Along the way he created a powerhouse, which last year saw profits jump 20.3 percent to $1.25 billion as sales rose 6.1 percent to $12.15 billion.
While many have struggled with weak mall traffic, Burgdoerfer told the conference that some of the company’s competitors have failed to evolve.
“Mall has been tough because a lot of folks in the mall frankly aren’t doing things that are that much different from what they’ve done historically,” he said. “One of the things that, through Les Wexner’s leadership, we’ve tried to do in our business over the years is really bring newness, difference through our merchandise, through the sales experience with our store associates, through the regular redesign and reinvestment in our store environment, through the introduction of new categories and subbrands like Pink at the Victoria’s business, where there’s been a regular flow of innovation and change in our stores that make our business interesting to consumers.”