‘I’ve got 5,000 years of history on my side,’ says Leslie Wexner, chief of parent company L Brands, who declares that the shopping mall is the brand’s future
Victoria’s Secret is going back to the future.
As with many other fashion retailers, the most iconic of American lingerie brands has been fighting trends recently as customers turn to shopping online and more niche brands. The share price of its parent company, L Brands Inc., has collapsed by around 50% from a peak two years ago, wiping out $14 billion in shareholder value. But L Brands chief executive Leslie Wexner still thinks that the future is the physical store.
To that end, L Brands has actually increased its store count— to about 3,000 in North America —in recent years. 70% of all new investments go into opening and remodeling physical boutiques. “I don’t think [online shopping] is a new norm,” Wexner, 80 years old, told the Wall Street Journal recently. “There are times when that gets interrupted, but people want to be with other people. I’ve got 5,000 years of history on my side.”
Despite widespread store closures and retail bankruptcies in recent years, Wexner points to how Apple Inc. and LVMH Möet Hennessy-owned cosmetics chain Sephora have found profit by expanding their physical boutique networks recently. He argues that lingerie and fragrance, two mainstays of Victoria’s Secret, can also lure female shoppers to stores since they prefer to experience them in person rather than digitally. People will go to boutiques “if the store environment is exciting,” Wexner told the Journal. (L Brands also owns the higher-end intimates brand La Senza and Bath & Body Works, among other labels.)
This comes as social media, now seen itself as a storefront for online brands, is under stress. In an environment of “fake news,” there’s some evidence that people are reconsidering how they spend their time online. Facebook lost users in North America for the first time in the last quarter of 2017, with daily users dipping from 185 million to 184 million. People spend a combined 50 million hours less per day on the social media platform, Facebook head Mark Zuckerberg said. Facebook has been amping up the retail ads it shows on platforms like Instagram recently.
That said, it isn’t clear if that dissatisfaction necessarily means that people will return to the shopping mall, long a socialization venue of choice. L Brands is expected to report a drop in same-store sales growth for 2017.
© 2018 Dow Jones & Company, Inc. All Rights Reserved