The “less is more” approach seems to be a winning strategy for Victoria’s Secret, as the lingerie retailer showcased a robust August despite a weak quarter.
This success was attributed to adjustments in their global strategy, along with partnerships that led to the creation of compact stores, resulting in strong results.
The adoption of a contemporary and approachable store format, which demanded less capital investment, also played a role in facilitating partner expansion. Moreover, the incorporation of online sales into their international framework was recognized as a contributing factor to this favorable transformation.
“Those three changes over the course of the last few years are really, really paying off in a in a very positive way,” said Victoria’s Secret Chief Executive Officer Martin Waters on Thursday (Aug. 31) during an earnings call with analysts.
In compact store formats, consumers are more likely to experience curated spaces where products are selected to cater to their specific preferences. The intimacy of a smaller store allows for a more personal interaction between shoppers and store associates, fostering a sense of exclusivity that today’s consumers seek.
The paradox of choice is a well-documented psychological phenomenon.
When faced with an overwhelming array of options, consumers often experience decision fatigue and dissatisfaction. Smaller store formats have an opportunity to alleviate this burden by offering a narrower selection that simplifies decision making. This lean approach empowers consumers to make choices more efficiently, leaving them content with their purchases.
Sustainability has also become a hallmark of conscientious consumer behavior. Smaller store formats contribute to sustainability in multiple ways, such as lower energy consumption and less waste. With a quicker inventory turnover rate, perishable items are less likely to spoil, aligning with the growing global movement to reduce food waste.
Lastly, smaller stores stand out by maintaining product quality and freshness through a streamlined inventory and faster turnover.
The news follows Victoria’s Secret’s partnership with Amazon in June to offer customers a diverse selection of products, including ]underwear, swimwear and loungewear. Through its dedicated Amazon storefront, Victoria’s Secret has streamlined the process for shoppers to browse through products from their in-house brand Pink as well.
“One of our missions at Amazon Fashion is to create shopping experiences that connect customers with brands they love,” said Muge Erdirik Dogan, president of Amazon Fashion, in a statement at the time. “Adding a wide assortment of lingerie and apparel from Victoria’s Secret to our stores has been a seamless progression of our work together. We look forward to expanding our selection and inventing new ways for our customers to shop.”
Additionally, specific Victoria’s Secret clothing was included in Amazon’s “try before you buy” initiative. The program, available exclusively to Prime customers, allows buyers to try on bras before making a purchase.
Read more: Victoria’s Secret’s Relevancy Bid Leads to Expanded Partnership With Amazon
Turning to the upcoming fourth quarter in the domestic sphere, Victoria’s Secret is looking ahead to the fall season.
The company is planning the launch of new collections, an upcoming world tour and a loyalty program. Victoria’s Secret expressed optimism about the success of these projects.
In the second quarter of 2023, Victoria’s Secret revealed a net loss of $1 million, equivalent to $0.02 per diluted share. This outcome stood in contrast to the net income of $70 million, translating to $0.83 per diluted share, reported in the same quarter of the previous year. The operating income for the second quarter of 2023 was $26 million, a notable difference from the operating income of $98 million registered in the second quarter of 2022.
Accounting for the effects mentioned in the press release’s conclusion, the Q2 2023 adjusted net income totaled $19 million ($0.24 per diluted share). Adjusted operating income for the same period was $49 million, aligning with the midpoint of the guided range. In comparison, Q2 2022 saw an adjusted net income of $92 million ($1.09 per diluted share) and an adjusted operating income of $127 million.
Victoria’s Secret reported a decline in net sales for the second quarter of 2023, totaling $1.427 billion. This represented a decrease of 6% when juxtaposed with the net sales of $1.521 billion documented in the corresponding period of the previous year. Notably, the total comparable sales in the second quarter of 2023 experienced an 11% reduction in comparison to the second quarter of 2022.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More