August 22, 2014
L Brands executives expect this year’s holiday shopping season to be a lot like last year’s — and that means plenty of discounts.
“We anticipate a lot of promotional (discount) activity going into the holidays,” said Nicholas Coe, president and CEO of the Columbus-based retailer’s personal-care chain Bath & Body Works. “I’m not sure why it would be any different from last year.”
The remarks came yesterday, during L Brands’ conference call with analysts about second-quarter earnings.
L Brands, also parent of intimate-apparel chain Victoria’s Secret, reported results for the quarter that were slightly better than the expectations of Wall Street analysts. The news was a bright spot as other retailers have mostly been reporting slow sales and light traffic in malls.
Those ho-hum reports will push many retailers to offer deep discounts during the key holiday season.
L Brands is ready for the challenge, said Sharen Turney, CEO and president of Victoria’s Secret and its sub-brand Pink.
“If we have to turn on (discounting), we’re ready,” she said.
“We will be launching one of our biggest categories, Dream Angels, as we go into holidays,” Turney said. “We want to be best in the world of bras.”
Pink, the chain’s collegiate brand, has been doing good business during the current back-to-school season, Turney said.
Bath & Body Works may not start its focusing on holiday sales right away.
“We’re inherently a very giftable brand,” Coe said. “We don’t have to be too early (in putting up holiday items).”
L Brands has increasingly focused on being able to quickly react to what its customer wants. That focus has now turned into a competitive advantage for Victoria’s Secret, Turney said.
“We probably have cut all manufacturing and lead time in half,” she said. “It does vary by category. Panties is obviously our fastest category, and bras are down to three to seven weeks. But there’s always more opportunity. It takes a lot of coordination.”
Bath & Body Works is also “really focusing on rapid replenishment,” Coe said. “It really is part of a working model.”
L Brands executives also said that international expansion is going well, with one exception: the retailer’s Canadian lingerie chain, La Senza, which has been closing stores in the United Kingdom.
“We acquired the brand rights in the U.K. about two years ago, and it was in a distressed state,” said Martin Waters, president of international operations.
La Senza does, however, have “significant global potential,” Waters said. “Our Canadian fleet is steady at about 150 stores.”
Meanwhile, there is opportunity for 40 or 50 more Victoria’s Secret stores in the Middle East and Turkey, Waters said. The chain is using its smaller Victoria’s Secret Beauty and Accessories stores as leading indicators for expansion of its full assortment stores in those markets and in China and western Europe.
“It bodes well for 2015 or 2016,” Waters said.