(Filed Under Financial and General Interest News). Fourth quarter Victoria’s Secret and Pink direct sales plummeted by 7.2%, or $41 million (to $526.1 million), as the company tested its strategy of eliminating its famous print catalog (which it dropped in early 2016).
Meanwhile sales in the quarter at the brick-and-mortar stores for those same brands in the U.S. and Canada rose by $15.5 million, from $2.0472 billion to $2.0627 billion. Thus the combined total slid from $2.6143 billion in the final fiscal quarter of 2015, to $2.5888 billion for the last three months of fiscal 2016.
A similar trend continued in the four weeks ended January 28, 2017. Comparable store sales for Victoria’s Secret and Pink in North America declined by 4%. But when the results for its direct business were added in, the combined decline was a striking 10%, indicating a dramatic and precipitous decline in its direct business during the month.
Explaining the results, Amie Preston, chief investor relations officer for parent company L Brands pointed out that Victoria’s Secret recently exited swimwear and apparel, part of the reason “Victoria’s Secret January comparable sales were down 10% to last year.” She added, however, that “Comparable sales excluding the non go-forward categories were down 3% to last year, driven by a reduction in promotional activity.” Overall, “Strength in the Pink and beauty business was offset by declines in the exited categories of swim and apparel and the lingerie business.”
She continued: “The merchandise margin rate was down to last year as an improvement in go-forward selling margin rate was more than offset by year-end inventory adjustments and by the impact of exiting non-core businesses. Fourth quarter sales at Victoria’s Secret decreased 1% to $2.591 billion and comps decreased 3%. Comps excluding the non go-forward categories were up 1%.”
For L Brands as a whole, which also operates Bath & Body Works, La Senza and Henri Bendel, “Net sales for the fourth quarter ended January 28, 2017, were $4.489 billion, an increase of 2 percent compared to $4.395 billion for the quarter ended January 30, 2016.” Comparable sales for the quarter “were flat.” The company also reported that net sales for the “year ended January 28, 2017, were $12.574 billion, an increase of 3 percent compared to $12.154 billion for the year ended January 30, 2016.” Comparable sales for the year “increased 2 percent. For the year, the exit of the swim and apparel categories had a negative impact of 2 percentage points and 3 percentage points to total company and Victoria’s Secret comparable sales, respectively.”
Commenting on the retail strategy in the month ahead, Preston noted, “February will begin with a focus on Valentine’s Day and shift to our Body By Victoria collection after Valentine’s Day.” She added L Brands “total company comps to decline mid-single digits in February, which includes a negative mid-single digit impact from the exit of swim and apparel at Victoria’s Secret.” — NM
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