Is changing of the guard becoming popular in the consumer industry? Following $Starbucks (SBUX)$, $Victoria's Secret (VSCO)$ has announced a change in CEO, and the new head honcho comes from Rihanna-founded companySavage X Fenty.
Tough times for Victoria's Secret, too
Victoria's Secret has seen a steady decline in recent years, which is especially evident in its financial performance in 2023.In the third quarter of 2023, Victoria's Secret's net sales fell 4% to $1.27 billion and same-store sales dropped 7%, according to its latest financial report.
In previous quarters, the company failed to meet sales and profit expectations, causing it to gradually lose market share to its competitors.Despite the company's efforts at rebranding and restructuring its marketing strategy, the results have not been significant, especially in terms of sales performance in the lingerie market, which has seen low-to-mid single-digit declines in lingerie sales in North America.
In Q2 2024, Victoria's Secret released preliminary financial results that showed a potential sales decline of 1% to 2%, but an improvement over the previously projected decline of 3%.Meanwhile, adjusted earnings per share (EPS) are expected to be in the range of $0.34 to $0.39, which is higher than the market's expectation of $0.16.This small sign of recovery shows that the company is making some progress in its efforts to improve its performance.
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A few fatal points for Victoria's Secret
Brand Image Crisis: Victoria's Secret's traditional marketing strategies are gradually being seen as outdated as consumer perceptions of beauty change.The brand was once known for its sexy, luxurious image, but with society's emphasis on diversity and inclusion, the brand's image is being questioned.
Increased competition in the market: Emerging brands such as Aerie and Savage X Fenty have quickly captured market share with more inclusive marketing strategies and product lines.These brands have earned a good reputation among young consumers, and Victoria's Secret's market share is therefore under serious threat.
Sales channel transformation is lagging behind: despite the company's efforts in digital transformation, Victoria's Secret is still underperforming on e-commerce platforms compared to its competitors.Consumers are price-sensitive and are increasingly choosing to shop at more competitively priced retailers.
Internal Management Problems: Over the past few years, Victoria's Secret has gone through a number of top management changes, resulting in a lack of clarity in the company's strategic direction and difficulties in internal coordination.This instability has had a negative impact on the brand's long-term development.
Can Savage X Fenty CEO Save the company?
Hillary Super officially took over as CEO of Victoria's Secret on September 9, 2024, having served as CEO of Savage X Fenty (founded by European and American songstress Rihanna) and as global CEO at Anthropologie Group.
Her career has brought her a wealth of retail management experience, particularly in the lingerie and women's fashion sectors.
Savage X Fenty: At this brand founded by Rihanna, Super successfully appealed to young consumers, boosting the brand's market awareness and sales through a diverse product line and inclusive marketing strategy.
Anthropologie Group: During her tenure, she drove the brand's digital transformation, successfully boosting online sales and optimizing operational efficiency in offline stores.Her leadership enabled the brand to maintain relatively steady growth in a highly competitive market.
American Eagle Outfitters: In her executive role at the company, Super was involved in the development and implementation of the brand's strategy, which helped the company maintain a strong market position among younger consumers.
Hillary Super's proven track record of success and keen eye for market trends make her the ideal candidate to revitalize Victoria's Secret's brand.
Market Reaction
The market has reacted positively to the appointment of Hillary Super, with Victoria's Secret's share price rising by around 20% following the announcement of the new CEO.Investors generally believe that Super's arrival could bring new growth drivers and market competitiveness to the company.
Super's appointment is also seen as an important step in the rebranding of Victoria's Secret.Donna James, Chairman of the Board of Directors, said that Super's extensive experience in retail and deep understanding of consumer needs will play a key role in the company's future growth.
Overall, Victoria's Secret's new leadership team and upcoming strategic adjustments could bring new hope for the brand's revival after a difficult period.In the coming months, with a new CEO in place, the market will be watching Victoria's Secret's performance closely to assess whether it can successfully turn the tide.
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