Victoria's Secret Downgraded to 'Negative' by Investment Advisors
There's a "fallen Angels" quip to be made here somewhere.
It would be putting things very mildly to say that Victoria's Secret has had a rough go of it over the past year. The brand has been steadily losing public favor due to its almost-enthusiastic refusal to embrace a more inclusive, realistic approach to marketing and casting. In particular, comments Chief Marketing Officer Ed Razek made in a pre-VS Fashion show interview on Vogue.com begat an onslaught of passionately negative press and social media chatter. In its latest attempt to "diversify," for example, the company faced criticism for adding two more cisgender, white Angels to its growing roster — one that's slightly curvier than the rest of the bunch, and one redhead, the first red-haired Angel ever.
And that's to say nothing of the lingerie company's actual product: Its elaborate panties and padded bras also seem to have fallen out of favor based on quarter after quarter of declining sales and increasing unsold inventory as reported by parent company L Brands — problems that bad press isn't exactly going to fix.
As a result, things just got worse for the company. On Tuesday, Moody's Investor Service downgraded L Brands's outlook from "stable" to "negative" due to Victoria's Secret's performance. "L Brand's negative outlook reflects the deteriorating operating margins and negative comparable store sales at Victoria's Secret for the past 10 quarters" said Moody's Vice President, Christina Boni, in a statement. A downgrading serves as something of a warning to investors and is issued by analysts based on research into the company and overall market.
"Current weakness at its Victoria's Secret division has pressured operating results with increased promotional activity as the company revamps its product and aligns its inventory levels with demand," reads a press release announcing the downgrade.
Even before its recent PR disasters, Victoria's Secret wasn't doing well, facing some of the same issues as other mall brands who have been trying to overhaul themselves for years to little avail. In November, in response to both falling sales and recent controversy, the company's CEO resigned and was replaced by John Mehas from Tory Burch, who described plans to evaluate every aspect of the business, as well as bring back swim and other categories. In February, L Brands announced plans to close over 50 stores. According to WWD, shares of L Brands stock are down more than 25% year-over-year and more than 70% since 2015.
Of course, some negative press and a negative rating from Moody's aren't enough to kill a giant like Victoria's Secret, which still has plenty of brand equity and is still the market-share leader in women's lingerie. But clearly, they have a lot to figure out.
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