L Brands Stock Halves: L Brands (NYSE:LB) stock has more than halved since January of this year. At the beginning of 2018, each LB share was valued just shy of $60 USD. Now, you’ll buy yourself one for $26.43. (If I could insert a cringe-face emoji here, I would.)
The company’s two biggest brands are Victoria’s Secret (VS) and Bath & Body Works. The former is dwindling, while the latter has hit every expected margin this quarter… and then some.
In fact, analysts are saying that Bath & Body Works stock is outperforming.
L Brands Stock Halves Year to Date
So what is causing Victoria’s Secret—the brand that has cultivated cultural icons and supermodels—to fall from such high graces? Are we dealing with internal company issues here or a tired marketing campaign?
Maybe it is both.
PINK
According to Wall Street analyst Michael Binetti:
“We fear VS’ ongoing brand issues are radiating to Pink, where LB is stepping up promos to support sales.”
The Pink range was the catalyst for 23% of L Brand’s revenue and Victoria’s Secret growth back in 2015 and 2016, according to Bank of America’s Lorraine Hutchinson. However, since the 2017 holiday season, “struggles with lounge have caused sales and margins to soften […] With every quarter that goes by, the VS problems seem more broad-based and we just don’t see LB articulating an aggressive enough strategic shift to address changing competitive dynamics.”
If the VS brand’s key driving force is exhibiting a deteriorating performance, then the result spells disaster for the company as a whole.
Also, internally, things are getting worse before they get better; Pinks CEO Denise Landman is retiring at the end of the year.
L Brands Stock Halves: A Tired Marketing Campaign?
Falling PINK sales is one thing, but then the VS brand image is another.
According to UBS analyst Jay Sole: “LB hasn’t indicated it’s willing to evolve [it’s brand image]. Until it does, we see material risk its financial performance deteriorates further.”
Stuck in its ways, Victoria’s Secret has refused to adapt to a changing fashion consumer landscape.
The reality is that fashion brands across the board have been tirelessly aiming their products at a more diverse consumer range. We are seeing every type of body size, race, color, age, and gender reflected in marketing campaigns.
But Victoria’s Secret has not changed. Not even an iota. The brand does not accommodate a plus size frame and refuses to carry any models that are above a UK size 8 in physique.
To put that in perspective, the average size for women these days is a UK 14-16. So, you do the math.
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Alienation
Is Victoria’s Secret alienating the majority of women from its brand—those who feel it is only suited to picture-perfect bodies because that’s what the brand still pushes?
Time and figures will tell if the brand can rejig. LB stock can’t afford another year of halves though, that is for sure.
Some still have faith; Sole continued and believes Victoria’s Secret is simply “a great brand going through tough times.”
But what do you think?
Featured Image: USA Today FTW
