- PINK has become one of Victoria’s Secret’s only areas of growth.
- But in its parent company’s most recent quarterly results, the brand showed signs of slowing and has ramped up its promotions.
- Jefferies analyst Randal Konik wrote in a note to investors on Monday that PINK is on “the precipice of collapse.”
PINK was once Victoria’s Secret’s saving grace, but now analysts say the brand is showing signs of struggle.
In recent years, PINK has become one of the most successful parts of the company, reporting stronger sales than other parts of the store.
In parent company L Brands’ most recent quarterly results, PINK CEO Denise Landman hinted that the brand might be headed towards stormier waters, describing its performance as “mixed” during the quarter. This was due to “disappointing” sales in parts of its apparel collection, she said.
Over the weekend, Victoria’s Secret released promotions offering discounts on PINK products, suggesting that its business could be under pressure.
The level of promotions is especially concerning as the PINK label now accounts for nearly 40% of total sales at Victoria’s Secret, Konik added.
We visited one of its stores to see what was happening:
We visited a Victoria’s Secret store in Downtown Manhattan, which has a separate PINK section.
As we approached the PINK section, we instantly spotted its loud, 40%-off sale signs, which were tactically positioned to lure customers in to the store.
These promotions are an indicator that the brand is looking to drive traffic to stores.
The promotions were mostly on core products, such as underwear. This was confusing given that in the company’s fourth-quarter earnings results, Landman said that intimates, specifically bras and panties, drove the strongest growth for the brand.
Landman said the “Wear Everywhere” collection and sports bras were key sellers during the quarter. Despite this, these bras were all on sale for $US20.
The discounts hadn’t hit the sportswear section, however. These track pants were being sold for $US49.95.
But all panties were on sale at five for $US28 or $US10.50 each.
Since its sister brand Victoria’s Secret axed its swimwear line in May 2016, PINK is the company’s only brand to offer swimwear. However, customers don’t seem to be biting, as all swimwear was being sold for 40% off.
Major discounts are usually a sign that retailers are trying to clear inventory. In this case, it seemed like the store was trying to get rid of styles that didn’t take off. Classic bralette styles were not on sale.
During the fourth quarter, “apparel had areas of success and disappointment,” Landman told investors in February.
The promotions would suggest that the store’s leisurewear clothing has been less successful than its sportswear.
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