Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Victoria's Secret L Brands Loses 50% of its Value


Wed 17 Jul 2019 | 08:14 PM
Taarek Refaat

Women-wear manufacturer Victoria's Secret sales have been dropping for quite a while.

Retailer's parent company, L Brands target price has been downgraded earlier this week from $35 to less than $27 per share. It lost more than half its value in the past five years, dropping from $57.71 to $26.43 per share.

[caption id="attachment_66130" align="aligncenter" width="614"] L Brands stock price[/caption]

Citigroup analyst Paul Lejuez said that Victoria's Secret management is 'slow to implement meaningful change' and is 'shifting away from cultural norms'.

Victoria's Secret is struggling at a time where movements against sexual harassment such as "Me Too" have ducked the company's advertising strategy, which is crammed with models posing in lingerie.

Also, the company's dependence on push-up bras has distanced customers that prefer fitted ones.

"Women are shopping more at rival brands such as American Eagle, ThirdLove, and Lively instead of Victoria's Secret," Lejuez said, adding that the company should adopt a more inclusive approach, leaning towards comfort rather than sex appeal.

However, a shift towards inclusiveness might not be the best approach as Victoria Secret may lose its existing customers.

"The company should consider spinning off Victoria's Secret and also launch an initial public offering for the far more successful Bath & Body Works chain that L Brands owns," James Mitarotonda, an L Brands investor, said.

L Brands has already taken some measures to enhance its performance, including the shutdown of the Henri Bendel brand, sale of its La Senza loungewear, as well as lowering of its pidend.

[caption id="attachment_66129" align="aligncenter" width="500"] Les Wexner on the left with model Stella Maxwell[/caption]

The parent company has been one of the worst performers in the S&P 500. Moreover, concerns have been raised about the connection between CEO of L Brands Les Wexner's and Jeffrey Epstein, who has been charged with sex trafficking of minors.

However, Wexner wrote that he had cut ties with Epstein 12 years ago.