Victoria’s Secret saw sales growth accelerate in the third fiscal quarter, an indication that the company’s turnaround strategy is taking hold, according to an analyst.
The company’s net sales for the quarter ended November 1 soared 9 per cent to US$1.472 billion, compared to the 3 per cent uplift in the second quarter. It also comes off the back of a 6.5 per cent increase in the year-ago period.
Comparable sales were up 8 per cent during the quarter.
“While this was helped by the restoration of the website, where an outage disrupted last quarter, it is also an indication that the strategy put in place by management is taking hold,” commented GlobalData MD Neil Saunders.
“Even over a short space of time, Victoria’s Secret has become a more customer-centric business, and this is making a difference.”
While some of the headier growth was driven by international, which saw a 33 per cent uplift, the North American business also saw success with a 5.4 per cent increase in store revenue and a 4.3 per cent rise in digital sales.
According to the analyst, one of the most effective changes that management put in place early on is the renewed focus on innovation.
“As a specialist, Victoria’s Secret should be about producing and delivering great products that are comfortable and make a difference to the customer. In a category like bras, there is a huge scope for this due to the technicalities of fit, form and function,” said Saunders.
“In recent years, we believe that Victoria’s Secret dimmed its prowess in this arena and suffered as a result. However, current leadership are bringing this back into the heart of the business with solutions like FlexFactor,” he added.
Another contributing factor was investment in stores to provide higher levels of customer service and advice, Saunders said. New store designs are lighter and more welcoming, making Victoria’s Secret a more accessible brand with a wider appeal, he added.
Away from the Victoria’s Secret label, the Pink brand also saw a lot of progress. According to Saunders, the brand is moving from being a bit of a bolt-on to Victoria’s Secret to a distinct part of the business with its own tone and essence.
On the bottom line, the company narrowed its operating loss from $47 million last year to $19 million. Net loss also went down from $56 million to $37 million.
The retailer has raised its outlook for the full year, expecting net sales to be in the range of $6.45 billion to $6.48 billion, compared to prior guidance of $6.33 billion to $6.41 billion.
