Victoria’s Secret breezed past the turmoil at the West Coast Ports — which are now only starting to get back up to full speed after a long-simmering labor dispute.
“We by-passed all the West Coast strikes because we made decisions to air everything,” said Sharen Turney, president and chief executive officer of L Brand’s Inc.’s Victoria’s Secret Direct unit, on a conference call with analysts. “We will continue to air everything in.”
The jam up at the ports has cost other retailers. Karen Hoguet, chief financial officer of Macy’s Inc., said Tuesday that about 12 percent of the retailer’s first-quarter merchandise receipts would be delayed because of the ports. “This will have some impact on our sales, gross margin and expense in the first few months of the year,” she said.
While it can help importers avoid some headaches, shipping via air costs is more costly than using ships. The quicker turnaround times with air shipments, however, help brands be more reactive to trends and capture more full price sales.
Asked if there were a chance to boost profit margins by moving some shipments back to the seas, Turney said Victoria’s Secret would stick to the skies.
“I am so passionate to air everything,” she said. “There is not going to be a reduction of air freight. I think that [shipping by air] more than pays for itself, on terms of being closer to the customer, you have less markdowns, a higher turn rate, better accuracy.”
Victoria’s Secret has also been working to make product decisions later to get more out of hot looks.
“We’ve already taken probably four months out of our development time and believe there’s probably another two months to continue to work [on],” Turney said.
L Brands has been on a roll. The company said late Wednesday that fourth-quarter profits increased 15.4 percent to $564.8 million, or $1.89 a diluted share, as net sales rose 6.6 percent to $4.07 billion. Comparable-store sales were up 4 percent at Victoria’s Secret stores.
In a time of general retrenchment for many mall-oriented retailers, Victoria’s Secret is getting more aggressive.
“Today our average store selling square footage has been about 6,000 square feet,” Turney said. “Our average selling square feet, depending on the market, probably needs to almost be double that.”
The retailer sees opportunities to grow its Pink business as well as its sport and swim businesses.