Victoria’s Secret is struggling to remain the intimates retailer of choice.
In an attempt to revive the brand, the lingerie company has named John Mehas the new chief executive officer, confirming an earlier report by WWD. Mehas, who is replacing former lingerie exec Jan Singer, will begin the new gig in early 2019. Singer resigned unexpectedly last week after just two years on the job.
“John is an outstanding retail merchant and we could not be more excited for him to lead Victoria’s Secret Lingerie to a new phase of success,” Leslie Wexner, chairman and ceo of L Brands, said in a statement Monday. “Our number-one priority is improving performance at Victoria’s Secret Lingerie and Pink. In doing so, our leaders are coming in with a fresh perspective and looking at everything…our marketing, brand positioning, internal talent, real estate portfolio and cost structure.…I am confident that, under John’s leadership, Victoria’s Secret Lingerie, the world’s leading lingerie brand, will continue to be a powerhouse and will deliver products and experiences that resonate with women around the globe.”
Still, shares of L Brands, parent company to Victoria’s Secret, closed down 2.1 percent to $34.55 on Monday and continued to fall more than 4 percent in after-hours trading.
During the third quarter, which ended Nov. 3, 2018, Wexner said the company made “some tough decisions” in an effort to improve business. Those decisions include shutting down Henri Bendel and exploring other options for its smaller intimates company, La Senza.
L Brands has been steadily losing market share in recent years as companies like American Eagle Outfitters’ aerie and Lively, brands that emphasize inclusivity, are growing in popularity. Company shares are down about 40 percent for the year.
Comparable sales at Victoria’s Secret, both in-store and online, fell 2 percent during the quarter — on top of a 4 percent decline in the same period last year. Net sales slipped 0.7 percent to $1.53 billion in the third quarter.
Meanwhile, income in all of L Brands was only a third of last year’s figure at $103 million, compared with $319 million a year ago. In fact, all of the company’s growth comes from its Bath & Body Works business.
In addition, the company has grappled with numerous public errors in judgment recently. Earlier this month, in a move that analysts called “tone deaf,” the annual fashion show returned to New York, complete with scantily-clad waifs gracing the runway. The same day, Ed Razek, chief marketing officer for L Brands, told Vogue magazine that the brand didn’t have any interest in plus-size or transsexual models. The comments sparked a backlash and forced the company to apologize on Instagram.
Over the weekend, founder of rival intimates company ThirdLove Heidi Zak took out a full-page ad in The New York Times, written as an open letter, criticizing Victoria’s Secret and Razek’s comments.
“Your show may be a ‘fantasy,’ but we live in reality,” Zak wrote. “Our reality is that women wear bras in real life as they go to work, breastfeed their children, play sports, care for ailing parents and serve their country.…It’s time to stop telling women what makes them sexy — let us decide.”
Before that, Victoria’s Secret eliminated its swimwear category, a potentially lucrative category for the brand. And then there was the fan-favorite catalogue that disappeared around the same time. Amid all this, the seemingly stubborn company has not closed a single Victoria’s Secret store; a move that seems bizarre for even the most successful brands as more and more retail shifts online.
“This is a company that needs change,” said Ike Boruchow, a Wells Fargo analyst. “The investment community needs to see change. They need to know that management isn’t going to sit on its hands anymore.”