American Underwear And Beauty Tycoon L Brands Inc. (NYSE:LB Repmission Of Swimwear Business)

American underwear and beauty giant L Brands Inc. (NYSE:LB) announced on Tuesday that its "Victoria" s Secret Vitoria secret (VS) brand announced the resumption of its swimsuit business in 2016 because of "huge demand".

Swimsuit business can be described as the "Feng Shui lifeline" of the VS brand. By the end of April 2016, the US company announced that it had stopped the $500 million swimsuit business and reorganized the VS, aiming to further focus on its core commodity category and streamline its operation. The specific measures included restructuring its business into three major business units: Victoria 's Secret Lingerie (virgin underwear), PINK (girl series underwear) and Victoria' s Secret Beauty (Wei Mei beauty).

Inc. has entered a long "broken road". So far, there has been no sign of recovery and ability. Instead, it has been defeated by the trend of the girl underwear brand and other Internet underwear brands under the American Eagle Outfitters Inc. (Outfitters), and the 2017 Hollywood campaign has aggravated the rejection of contemporary women, especially the younger generation of social media generation, because its advocating "sexy fantasy" is considered to be a male based view of materializing women's culture, and the annual underwear show is the culmination of this culture. More and more criticisms have been heard in the underwear show, and fewer and fewer spectators have shown that the fans are losing their fans. Following the announcement of the quarterly report, L Brands Inc. shares fell more than 10% on a single day, the largest single day decline in 6 years after the financial crisis, and since then, it has been dragged down by VS, L Brands

In the past 2018 fiscal year, VS has closed 27 stores in North America. At the beginning of this month's performance meeting, L Brands Inc. decided to close 53 VS North American stores within this year. The management said in the performance commentary that it was retrogression based on VS. "Compared with the historical level, we have substantially reduced the capital input of the business".

Over the past three years, the decline of VS has come mainly from physical stores, while online stores are still growing.

No fashion Chinese network (micro signal: nofashioncn) data show that as of February 2, 2019, the fourth quarter of 2018 fiscal year, VS comparable sales (including online sales) fell 3%, has not been able to achieve three consecutive holiday season growth, same store sales also recorded a 7% decline.

The newly announced swimsuit business will not be sold in the physical store. The US company said that only limited series of products were sold on the VictoriasSecret.com website. In addition, the online store will also sell four major swimsuits, beach brand Seafolly, Banana Moon, Lascana and La Blanca owned by the group.

The swimsuit strategy of "limited" and "online shop only" also shows that the group is cautious and cautious about the swimsuit business. This attitude has continued the group's style of dealing with the Bralettes trend and the Chinese market.

In the 2018 fiscal year ending in early February, after the VS opened the Shanghai Li Bao Plaza and Chengdu the Mixc in the Chinese market and held the underwear show in Shanghai in 2017, the US company said that after "market testing", it decided to change its strategy in the Chinese market to open a smaller store in the location market.

At the beginning of 2016, VS CEO Sharen Jester Turney was fired. Her successor, Jan Singer, tried to change VS's sexy style at the beginning of her appointment, tried Bralettes pformation, but eventually planned to abort, while Jan Singer resigned after the 2018 underwear show. She became the post consultant of Chinese underwear group urban beauty.

For abandoning the Bralettes style, Jan Singer has explained that Bralette style bra is just a flash in the pan, consumers can wear Bralettes for a few days, but wearing Bralettes for the rest of their lives may not be the best choice. She also said that Bralettes is just a trend of coming and going, and that Wei Ming is the best brand to build a bra.

The industry generally believes that the beauty and underwear giant of the United States is worried that Bralettes style will subvert VS's painstaking efforts to create a symbolic style for 20 years. Besides, Bralettes style will also affect the positioning and pricing of the brand, causing a major blow to profitability.

However, at present, the Bralettes style and its representative values are becoming more and more intense, while VS is getting worse and worse. All these prove that Jan Singer has made mistakes in its speeches, and its resignation is the best argument.

The re promotion of swimwear business is undoubtedly an itch for the current VS. Swimsuit business will not have any direct impact on VS's existing business in the short run, and the main problem of VS is not in swimsuit business.

No Agency analysts say swimsuit business returns in such a way that the only thing that makes the market daydream is: VS wants to convey signals to the outside world, and the brand has finally begun to try to correct its own wrong decisions.

At the beginning of this month, L Brands Inc. also rarely encountered the issue of agency disputes in the United States in recent years.

The hedge fund Barington Capital Group, L.P., issued an open letter to the US group chief executive, Leslie Wexner, asking the American underwear and beauty giant to imitate the previous Gap Inc. (NYSE:GPS) cover group's action to split the Old Navy Old Navy, and to split the current brand with stronger profitability.

Barington Capital CEO James Mitarotonda also asks L Brands Inc. to restructure its board of directors to increase diversity.

He believed that 9 of the 12 board members of the L Brands Inc. were men, and many of them had been in office for 10 years.

In response, L Brands Inc. listed the closure of Henri Bendel business over the past year, the sale of La Senza business, and the reduction of half dividend to reduce liabilities, while the promotion of Amy Hauk for the PINK business, the appointment of John John for underwear business, and a series of revitalization measures to demonstrate that the determination is being made to restore long-term revenue and profitability growth capability.

The report issued by IHS Markit, a data consultancy, pointed out that the short selling sentiment of L Brands Inc. was increasing in March 15th. However, the ETF holding shares showed a net inflow state. Although the company's credit default swap income declined, it remained at a three year high level, indicating that the market had a negative attitude towards the credit rating of the US giants.

Author: He Wei