Performance Continues To Slump, And This Year It Will Close 53 Stores.

With the change of consumer preferences, the market share of American sexy underwear brand is accelerating.

In the past week, the US retail giant Target announced the launch of three lingerie brands with a target annual revenue of over $1 billion. The Internet underwear brand ThirdLove has been invested in the L Catterton fund of LVMH's investment company, but the long lost company still has no signs of improvement.

According to the fashion business flash, L Brands, the virgin parent company, admitted in its fourth quarter and full year earnings report on Wednesday that its profitability declined again, and net profit fell 34.5% to 640 million dollars year-on-year, less than analysts expected.

But thanks to its sale of underwear business La Senza and the closure of a century luxury Henri Brendle and other initiatives, L Brands revenue grew 4.7% to $13 billion 236 million over the same period last year.

During the reporting period, the four quarter sales decreased from 5.1% US dollars to 2 billion 531 million US dollars in the first quarter of last year, while same store sales fell 3%. The annual revenue decreased 0.17% to 7 billion 375 million US dollars. The sales volume of Bath and Body Works fourth quarter increased by 8.9% to 1 billion 950 million U.S. dollars, while same store sales increased by 12%, and the annual revenue growth was from 12% to USD.

By the end of the reporting period, L Brands had dropped to 2943 sales outlets worldwide, 1422 of which were classified as Bath stores and 1721 outlets of Bath & Body Works.

As the core brand of L Brands, resuscitation has become a top priority for the group.

At the beginning of this year, Jan Singer, the chief executive of the company, officially left, and the successor was John Mehas from Tory Burch.

Although John Mehas has not announced any specific plans for taking office, it is certain that he will face tough challenges.

L Brands chief financial officer Stuart Burgdoerfer said in a conference call after the earnings report that this year the group will continue to increase its investment in the secret marketing, but will actively close down the redundant stores. Last year, it has closed 30 stores. This year, it will close another 53 stores in the North American market.

It is reported that in the past 10 years, the company has opened 820 stores, closed 673 stores, and sold 130 stores' management rights.

Stuart Burgdoerfer is still more optimistic about the increasingly crowded track in the underwear market, and believes that the focus of breakout is on product differentiation. As long as the product is sufficiently special, unique, fashionable and innovative, the brand will still have great potential in the field of underwear, so the future focus of development will return to the product.

Fashion headlines reported earlier that sales of underwear and sportswear products such as Wei's main business were not ideal. The makeup business became the only Department of the brand that had a high digit growth in sales and profits. Perfume, fragrances, accessories and Pink Beauty products and some gift sets became the best choice for consumers to buy gifts.

Stuart Burgdoerfer said that in order to stimulate the performance to recover as soon as possible, John Mehas and Amie Hauk, responsible for the Pink series, are improving their products. L Brands also decided to re launch swimwear series this year, trying to save more market share.

What is most significant is that in February 18th, it also launched a new high-end underwear series with French designer underwear brand Livy, ranging in price from 50 US dollars to nearly 500 dollars. Now it is mainly sold through the brand online platform and the flagship store in New York new Fifth Avenue and New Bond Street, London. This is the first time that the sale of other brand products has been launched in the store.

Analysts are cautious about Wei Ming, pointing out that the sales performance of the brand during the past holiday shopping season has been decreasing. The annual social media intensity and attention of the annual secret show are far behind.

In fact, since 2015, the popularity of the annual exhibition has begun to decline. Last year, the ratings of ABC, which was broadcast by the media, reached a record low. The total audience number was only 3 million 270 thousand. Among them, the audience ratings of 18 to 49 years old fell further from 1.5 in 2017 to 0.9, far below the ratings of Shanghai's live broadcasts in CBS.

In addition, a speech by Ed Razek, a chief marketing officer, after last year's big show, also reflected the reasons why the brand gradually lost its way to the young consumer market. He admitted after the show that the brand had no interest in big codes or denatured models.

Some people in the industry believe that after nearly 15 years of glory, the "aesthetic" era, which has always been on the top of Pyramid, needs to be vigilant.

According to NPD survey data, the motivation of buying underwear is different from that of 80% of women in the early stage. The frequency of purchase of young consumers is changing with the launch of new products. Comfort and leisure have become the key reference factors for the Millennium generation of women to buy underwear. This group is easily influenced by the social environment and is willing to try new things and styles.

In 2017, EBITED, a data agency, conducted an analysis of 80 underwear retailers in the world. It found that sales of steel braced underwear decreased by 50% compared to the same period last year, while the liner bra decreased by 22% compared with the same period last year.

On the contrary, the new steel free underwear increased by 18% compared with the same period last year, and the sports underwear grew by 27%, while the price of the underwear without steel ring was 26% cheaper than the market average price. This meant that the competitors of the stainless steel were rapidly capturing a large number of consumers at a lower price.

Therefore, whether the underwear brand launched by Amazon in 2016 or the three new underwear brands of Target department mentioned above, the target price is no more than 20 dollars, which is 1/3 of the average price of the secret.

In addition, the lingerie brand Aerie, the core concept of "pleasing itself", and the Savage x Fenty, a newly promoted underwear brand of hip-hop singer Rihanna, are also popular among young consumers. Data show that Aerie's sales in the same store last year increased by 32% in December.

Nevertheless, it is still a leader in the underwear industry, occupying about 2/3 of the market, and sold more than 3 billion dollars of underwear last year.

Romain Liot, the chief operating officer of the underwear brand Adore Me, once regarded as the biggest competitor of the biggest secret company, admits, "we are nothing compared to Wei Ming. They sell as much as we sell every year.

"

Simeon Siegel, a senior stock analyst at Nomura Securities, said that in recent years, it has indeed been challenging, but consumers can not deny that the brand is still the highest income underwear brand in the world.

A positive sign is that in recent two years, with the help of the trend of fitness, Wei Ming has created a new topic by publicizing the lifestyle of maintaining a healthy body with supermodels.

For the 2019 fiscal year, L Brands expects earnings per share to be between $2.2 and $2.6, with a profit and loss balance of earnings per share in the first quarter.

Ike Boruchow, a senior analyst at Wells Fargo, predicts that the new initiatives in the near future will not be effective, and that it will not be seen until the second half of this year.

After the release of the earnings report, L Brands fell 4.6% to $26.14 per share on Thursday, a cumulative drop of over 35% in the past year, and its current market capitalization is about $7 billion 500 million.