The owner of Victoria's Secret is making a move that shows customers are fleeing for the competition (LB)
- Victoria’s Secret is showing signs it’s desperate to retain its customer base, Jefferies analyst Randal Konik wrote in a note out to clients.
- The company is ramping up promos as inventories pile up.
- It’s also losing market share to other clothing lines like American Eagle Outfitters’ Aerie.
- Watch Victoria’s Secret owner L Brands trade in real time here.
Victoria’s Secret owner L Brands is doing things that suggest it’s trying to retain customers at all costs.
“The promotional posture keeps ramping up across the entire business,”Jefferies analyst Randal Konik wrote in a note on Victoria’s Secret parent L Brands sent out to clients Wednesday. “The need to increase promos to drive traffic indicates the consumer is going elsewhere for said products.”
Konik says Victoria’s Secret is losing market share and is a “broken” brand. He pointed out that back in March American Eagle Outfitters’ Aerie was gaining market share from Victoria’s Secret and its Pink brand.
It’s worth noting that Victoria’s Secret sales represented roughly 60% of L Brand’s total sales in the first-quarter of 2018.
Konik added that Victoria’s Secret’s pricing power is diminishing in part because of self-inflicted wounds. “What do you think happens when the consumer gorges on bras, panties and hand soap during May/June as things are literally being given away for free?” Konik asked. “What happens is demand is pulled forward near term while pricing power and brand equity are destroyed long term.”
Victoria’s Secret’s Pink brand saw back-to-back months of declining sales in March and April, and even though parent company L Brands saw comparable sales jump 5% year-over-year in May, Konik isn’t convinced things are turning around. He says to beware of the “dead-cat bounce” and the he believes “shares will continue to suffer.”
L Brands is down 38.47% this year.
Read the full article from it’s original source: http://uk.businessinsider.com/victorias-secret-l-brands-stock-price-customers-fleeing-for-competition-2018-6