Victoria’s Secret and Co. is the latest apparel retailer to leverage nostalgia and entertainment to get shoppers’ attention.
As at Gap, which recently reissued updated versions of its fragrances from the 1990s, the lingerie giant is modifying and expanding some of its fragrances. This includes iterations of the Bombshell and Tease lines, like this summer’s Tease Strawberry Bisou. The company is also “tapping into the nostalgia trend through archive drops,” as with last month’s Bringback special-edition release of Pink’s square bottle scents, which sold out online in less than a day, CEO Hillary Super told analysts on Thursday.
“More importantly, it reinforced the deep emotional connection our customers have with our fragrance heritage,” she said. “We have decades of iconic scents and formats across Victoria's Secret and Pink, and we are bringing them back in ways that feel relevant today.”
Victoria’s Secret hasn’t gone as far as Gap Inc., which is building what it calls a “fashiontainment” platform focused on entertainment, content and licensing, led by former Paramount executive Pam Kaufman. But on the call, Super did refer to Victoria’s Secret as “an entertainment brand,” pointing to the global appeal of its fashion show. The brand is capitalizing on that with a YouTube documentary series premiering this month, “Angels Among Us,” which tracks the search for a new model.
“Beyond the docuseries and the fashion show, we have an exciting and packed calendar ahead,” Super said. “We have more product innovation, partnerships and emotionally connected campaigns coming through fall and holiday, as we continue giving customers more reasons to engage with both brands.”
The product innovation has been key to the lingerie maker’s rebound, which was evident in its Q2 results. Net sales in the period rose 10% year over year to $1.6 billion. Comps rose 9%, and comps at brick-and-mortar stores grew 7%. There was growth at the company’s Victoria's Secret and Pink brands, in its beauty business and across channels.
“Within that broad-based performance, two areas stood out: bras and Pink,” Super said. At both the namesake brand and Pink, the bra business grew in the mid-teens, driven by core franchises and innovation, she said.
Growth is coming from new as well as existing customers, which “reverses a long period of continuous erosion of the customer file,” according to GlobalData Managing Director Neil Saunders.
“The fact that growth is broad-based, with success across channels and regions, demonstrates that there is genuine traction behind the numbers,” he said in emailed comments.
Profits were also robust. Gross margin expanded by 320 basis points to 38.8%; two-thirds of that was driven by higher merchandise margins due to more regular-price sales and fewer promotions. Net income in Q2 nearly tripled, topping $85 million.
The company said it got back more than 95% of the more than $140 million in IEEPA tariffs it paid, but excluded that from its adjusted results.
Victoria’s Secret and Co. raised its guidance for the year, estimating that net sales will range between $7.1 billion and $7.18 billion, up from $7.03 billion to $7.13 billion, compared to last year’s $6.6 billion. Adjusted operating income is now expected to reach as high as $590 million, up from the previous estimate for between $550 million to $580 million. Last year, adjusted operating income reached $403 million.
