Victoria’s Secret’s market share has sunk to 24% in 2018 from 31.7% in 2013, according to the latest U.S. women’s underwear report from Coresight Research, with digitally native brands gaining appeal among shoppers, particularly young women.

Victoria’s Secret is the number one women’s lingerie brand in the U.S., leading a market valued at $13.1 billion. According to Coresight, a mix of newcomers and changing trends have contributed to Victoria’s Secret’s decline over recent years.

Brands like Nike Inc.

NKE, -1.36%

 , Adidas AG

ADS, -1.76%

  and Lululemon Athletica Inc.

LULU, +0.26%

  are also taking share in women’s underwear thanks to an interest in sports bras.

“Market forces reshaping the U.S. intimates’ industry landscape, with an increasing number of entrants to the category over the past 10 years,” Coresight wrote. Emphasis on body positivity and inclusivity are spurring change, particularly in the evolving definition of sexy. Styles are changing to focus on fit and comfort with the help of artificial intelligence and other technology.”

See: Victoria’s Secret sells women’s underwear, but has been marketing to men

These smaller brands have grown their market share to 36.2% in 2018 from 28.1% in 2013, according to Euromonitor International data quoted by Coresight.

Victoria’s Secret is part of the L Brands Inc.

LB, -1.65%

  portfolio of brands. L Brands is scheduled to report first-quarter earnings on Wednesday after the closing bell. FactSet expects earnings to be flat year-over-year, and sales of $2.56 billion. L Brands shares have sunk 20.4% over the past three months while the S&P 500 index

SPX, -0.29%

  has gained 2.3% for the period.

A deep dive into Victoria’s Secret’s business conducted by Cowen analysts led by Oliver Chen yielded findings similar to Coresight, with Cowen analysts saying changes to stores, including closures, and innovation around product, specifically a focus on comfort and fit versus the sexy branding Victoria’s Secret is known for.

“Our results indicate that comfort and fit are weighed more heavily than sexiness when making a decision,” the report said.

“The rise of brands like Aerie, ThirdLove, Adore Me and True & Co. have capitalized on brand messaging that promotes comfort, body positivity, and female empowerment. Further, these brands are digitally native and largely direct-to-consumer, which has enabled them to leverage customer insights and data to inform its product strategy,” the report said.

Aerie is part of the American Eagle Outfitters Inc.

AEO, +0.00%

  portfolio of brands.

Victoria’s Secret has 1,143 stores in North America, but said it would reduce square footage during the fourth-quarter earnings announcement. Cowen models for up to 150 store closures while the brand has suggested a 4% square-footage reduction of about 50 stores.

Earlier this month, The Wall Street Journal reported that Victoria’s Secret will no longer broadcast its fashion show on network television amid plummeting ratings. This after the company shed its Henri Bendel and La Senza brands.

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Changes at the company, including changes to the board, have made Wells Fargo analysts bullish about the future of the Victoria’s Secret brand.

“All in, we’ll admit that we’ve been early on this call, but we continue to see reasons for optimism… and a compelling risk/reward at current levels,” analysts led by Ike Boruchow wrote in a May 10 note. Analysts rate L Brands stock outperform with a $42 price target.

UBS analysts are not as optimistic, hanging on to their neutral stock rating in a May 7 note.

“The pivotal L Brands question is if the company will revitalize its Victoria’s Secret brand domestically, 55% of sales, this year,” analysts wrote. “A new UBS Evidence Lab survey suggests the answer is no.”

In addition to the brand’s messaging, UBS calls out the company’s “sliding” margins, with pricing at the heart of the problem.

UBS has a $28 price target on L Brands shares.

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Cowen’s report also forecasts a continued decline in margins throughout fiscal 2019. Moreover, it will be hard to bring customers back to full-price after they’ve been “conditioned” to factor in a discount into their shopping habit.

“Our survey highlights that 34% of customers believe that prices are too high and/or that Victoria’s Secret should run even more promotions,” the Cowen report said. “Recall that gross margins have declined by over 300 basis points over the past three years and are expected to be down again in fiscal 2019 given declining merchandise margins.”

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