Victoria’s Secret (NYSE:VSCO) is undergoing one of the biggest branding shifts in retail history — ditching its decades-long sexualized marketing strategy for one catered to the current generation.
What’s the big deal? VS’ big pivot comes after years of trouble — with criticism that its marketing objectifies women, CEO ties with Jeffrey Epstein and falling profitability.
In 2018, VS’ market share in the US lingerie market was down to 24% compared to 32% in 2013.
- There’s a big shift in the lingerie market among Gen Z consumers — who favor inclusivity and comfort.
- Other brands are also going through massive branding changes — like Gap’s (NYSE:GPS) attempt with Yeezy.
The infamous pivot: As part of its change, VS separated from its parent company, L Brands (owner of Bath & Body Works) to now trade as its own stock.
- Brought in a new CEO, replaced execs and board members — with women representing 6 of its 7 board members.
- Replaced its winged runway Angel models with women activists ambassadors promoting diversity and change.
On the business side, VS cut down on inventory, promotions and unproductive stores — on the path to higher profitability.
Analysts are bullish on its stock, seeing upside as the company makes its recovery — putting a price target between $75-100 and driving up its stock by 70% in 2 weeks.
Looking forward: Turning around a $5b company isn’t easy — which involves aligning the entire company on its new vision among other risks:
- A rebranding on this scale risks driving away a large segment of its customers.
- Incoming competition from emerging lingerie brands — as they take an online-first, Gen Z-focused approach.
With its stock up big in such a short time, VS has even less room for error in its rebranding.
