LB LandBridge Company LLC

By Khadeeja Safdar 

Victoria's Secret has a problem and it's not much of a secret: athleisure is upending the bra business.

Growth is slowing in the retailer's core bra business, which accounts for about 35% of sales at its parent company, L Brands Inc., as shoppers seek comfort instead of flash from their undergarments. In the first quarter, the retailer said bra sales rose less than 10%, down from growth rates in the mid-teens in prior quarters. Shares of L Brands have tumbled 29% so far this year.

"It's not a sick business but it's not growing at the rate we want," the company's finance chief, Stuart Burgdoerfer, said in May. The retailer has taken steps in recent months to fix the issue. It has brought in new leadership, pared its merchandise and responded to the athleisure trend.

Victoria's Secret is setting aside more space in stores for sports bras and in April released a collection of "bralettes" -- bras without underwire and padding. In the past weeks, it began aggressively marketing its new line using window displays and email messages that say "no padding is sexy." In one recent TV commercial, models are running across a field of tall grass and one tells the other that she likes "being free!"

At issue is a fundamental shift in what female consumers want from their undergarments and how much they are willing to pay. Victoria's Secret has powered years of growth with images of busty models at more than 1,000 largely mall-based stores and a selection of padded bras retailing at prices up to $60. But many young consumers now prefer more authentic marketing and garments that resemble crop tops, with simple sizing and prices around $20.

"There's a move toward more natural looks. That's hurtful to Victoria's Secret," said Jefferies analyst Randal Konik, because if more people buy cheaper bras, total sales will suffer.

Executives at L Brands declined to comment.

A recent report by market research firm NPD Group found that 41% of female millennials had worn a sports bra in the past seven days, compared with 21% of non-millennials. "Comfort is a dominant theme throughout the fashion world, and today's bra consumer...is seeking both physical and personal comfort," said Marshal Cohen, chief industry analyst at the NPD.

Rivals have capitalized on the shifting consumer preference. Sales at American Eagle Outfitters Inc.'s lingerie brand, Aerie, have soared since the teen retailer stopped airbrushing its ads and began featuring models in various shapes. The company also got an early jump selling bralettes.

The shift toward comfort is more than just a fad, according to Aerie brand president Jennifer Foyle. "The next generations coming up the pike are particularly more comfortable in their own skin," she said.

Many online lingerie startups are also gaining traction by providing alternatives to Victoria's Secret, both in terms of style and marketing. True&Co. introduced a fit quiz to cater to women of various shapes. Lively makes everyday undergarments using elements from athletic clothes and swimwear. ThirdLove features models who look away from the camera, a stark contrast from Victoria's Secret's come-hither marketing.

"You have these other brands that are less so overtly sexy and much more focused on being natural," said Nomura analyst Simeon Siegel. "It's too early to say it will steal a dramatic share from Victoria's Secret but it's not too early to say that there's a real consumer preference for it."

But the pivot is hard for Victoria's Secret, which was built on affectation, not authenticity. In the mid-1990s, its heavily padded Miracle Bra, designed to create cleavage, was vying for market share with Sara Lee Corp.'s Wonderbra. Victoria's Secret doubled down on advertising with provocative TV commercials and theatrical fashion shows and in 2004 launched PINK, a brand aimed at teens and preteens.

It was a formula that served the company well. Victoria's Secret had $7.67 billion in revenue last year and now controls more than 60% of the women's intimate apparel market in the U.S., according to IBISWorld. It has reported sales growth in the U.S. and Canada every year for the last six and it continues to expand its fleet of stores wringing out more sales per average square foot each year.

But L Brands executives are aware that the business needs a marketing revamp. Last year, Victoria's Secret Fashion Show tripped on the catwalk as CBS ratings dropped 32% from 2014.

"They have realized that their traditional brand marketing is aging and it's not really connecting with modern-day consumers," said Cora Harrington, editor in chief of the Lingerie Addict blog.

In February, longtime L Brands Chief Executive Les Wexner stepped in to take charge after the sudden departure of Victoria's Secret CEO Sharen Turney. He made dramatic changes, including exiting the $500 million swim, shoes, apparel and accessories business, and substantially reducing its famous catalog. The company hired Jan Singer, former CEO of rival brand Spanx, to run its lingerie business starting in September.

Taylor Petersen, a 23-year-old who lives near Chicago, said she is turned off by Victoria's Secret's marketing and prefers "natural-looking" undergarments. "I just want to feel like myself instead of feeling trapped all day," she said.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com

(END) Dow Jones Newswires

June 29, 2016 12:49 ET (16:49 GMT)

LandBridge (NYSE:LB)
Historical Stock Chart
From Jun 2024 to Jul 2024

LandBridge (NYSE:LB)
Historical Stock Chart
From Jul 2023 to Jul 2024