I could see them doing some serious cuts to the budget of the show and possibly a revamp of creative direction before they abruptly cancel it however VS has scrapped sections of the brand itself in the past relatively quickly. RIP Swim, RIP Bridal(for the most part) 

3 minutes ago, phang.s said:

Their last show only got 4.9M views. The show requires way too much money for those type of numbers. If we see another 25% dip then that is cancellation territory for them. I doubt it would be cancelled, but there would be major budget cuts and firings. I'm kind of here for it. 

 

I agree, I think if there was another 25% dip (maybe even slightly less)  they might consider it as an absolute last resort. Like you said, they will probably have major budget cuts and layoffs before they would cancel the show. It is something they value way too much to just let go. They will probably need rethink and restructure things to compensate or to make up for the losses.

1 minute ago, PinkCouture said:

 

I agree, I think if there was another 25% dip (maybe even slightly less)  they might consider it as an absolute last resort. Like you said, they will probably have major budget cuts and layoffs before they would cancel the show. It is something they value way too much to just let go. They will probably need rethink and restructure things to compensate or to make up for the losses.

If the performers are not absolutely on point I'm expecting another dip in that range tbh

Investor Info:

Our second quarter earnings per share of 36 cents exceeded our initial earnings guidance of 30 to 35 cents, and benefitted by about 2 cents from a favorable tax rate.  Absent the impact of the lower than forecasted tax rate, we delivered an earnings per share result toward the high end of our range, as strong performance at Bath & Body Works and Victoria’s Secret Beauty offset weak results at PINK and Victoria’s Secret Lingerie.

We are not satisfied with this result and are very focused on improving performance at Victoria’s Secret.

 

 

VICTORIA’S SECRET •

Second quarter results at Victoria’s Secret were below our expectations.  Comps decreased 1% and the merchandise margin rate was down significantly across all major merchandise categories as we increased promotional activity to drive traffic and successfully clear inventory.   

 

• Second quarter sales for the Victoria’s Secret segment increased 5% to $1.725 billion, and comp sales decreased 1%, including a 5% decline in store comps. Total digital sales increased by 22%.  The spread between comps and total sales was driven by the adoption of the new accounting standard for revenue recognition and the calendar shift resulting from the extra week last year.
• The total segment gross margin rate decreased significantly, driven by a decline in the merchandise margin rate as mentioned above.
• SG&A expense deleveraged, driven principally by the reclassification of Angel card income and incremental wage investments.

 

Operating income declined 38% to $114.2 million, and the rate decreased by 450 basis points.
• In the lingerie business, second quarter comps were down low-single digits and the merchandise margin rate decreased significantly.  The comp decline was driven by a decline in bras, partially offset by growth in panties and sleepwear.
• We continue to see strong customer response to recent bra launches, including Sexy Illusions and the T-shirt bra.  However, this growth was offset by softness in products we are working to reset, including Body by Victoria.
• Lingerie is currently focused on newness in bras across key franchises throughout the Fall.  We recently mailed another magalogue after seeing a positive customer response from the first one in May.
• We also are investing in and expanding the sleepwear business for Fall, where we believe we have a significant growth opportunity.  Customers have been responding well to our sleepwear assortment, and it is a key category for Holiday.
• Turning to PINK, comps decreased in the mid-single digit range for the second quarter, driven by declines in both lingerie and loungewear.  Swim, which we are exiting, had a negative impact of about 2 points to the total comp.  The total PINK merchandise margin rate was down significantly to LY.
• PINK introduced a new loungewear assortment for back-to-school at the beginning of August which included an investment in embellishment, detailing and bling.  This helped drive record sales on PINK Friday on August 3rd, which was also supported by broad promotions.
• August-to-date performance, however, has been soft driven by loungewear.  We are applying learnings from the back-to-school timeframe and are leveraging speed models in our supply chain to make adjustments to the goforward assortment.
• Beauty delivered a strong second quarter performance in sales and margin dollar growth … comps increased in the high-teens range.  The customer responded to focus, fashion and newness in the assortment and we remained agile, chasing into what’s working.
• In Beauty, we will continue to build on the momentum in the business through the launch of new fragrances … the current focus is on Tease.  PINK Beauty has done very well, and we will continue to invest in that business.

Just now, phang.s said:

If the performers are not absolutely on point I'm expecting another dip in that range tbh

 

I hope to be wrong, but considering how things are going with VS I am pretty sure the ratings will so-so this year as well. The increases/decrease will be slight. Like Pheno said, I think they need to revamp their creative direction and target a wider range of consumers esp. in the USA.

It has very little (or does it?) to do with the show but I think one of the biggest fuck ups VS has done in recent years was getting rid of catalogs tbh, they were iconic and a constant visual reminder of the stores that made me want to go shopping, I'm usually too lazy to go to the stores or shop online on my own, but by getting the catalogs all the time I would find something I'd like and be like I'm gonna go get it! And then I'd spend more money in the store than what I had planned originally. I think getting rid of the catalogs lowered the brand's presence in households, therefore lowering people's interest in the brand.

 

I agree with Pinky, this show ain't getting cancelled by 2020, maybe by 2025 but 2020 is too soon, I do see some major budget cuts and heads rolling if ratings take another 25% dip this year tho

3 minutes ago, Clauds said:

I do see some major budget cuts and heads rolling if ratings take another 25% dip this year tho

Where is this 25% dip everyone keeps talking about because I'm looking at the actual investor reports and it's not even close to 25%

 

3 minutes ago, Prettyphile said:

Where is this 25% dip everyone keeps talking about because I'm looking at the actual investor reports and it's not even close to 25%

https://deadline.com/2017/11/victorias-secret-fashion-show-ratings-low-this-is-us-rudolph-legends-of-tomorrow-crossover-boost-nbc-1202216502/

 

 

1 minute ago, Prettyphile said:

Where is this 25% dip everyone keeps talking about because I'm looking at the actual investor reports and it's not even close to 25%

 

It is a hypothetical IF they dropped 25% what we think might happen

Just now, phang.s said:

https://deadline.com/2017/11/victorias-secret-fashion-show-ratings-low-this-is-us-rudolph-legends-of-tomorrow-crossover-boost-nbc-1202216502/

 

 

 

Oh I thought it was a random estimate you made up

I think VS biggest issue is How the quality of their products is shitty and how expensive they are 

Just now, star2011 said:

I think VS biggest issue is How the quality of their products is shitty and how expensive they are 

 

THIS!!!!

 

I also think they are not appealing to a wide range of consumers.

VS announced to close 20 stores the same day or around the same time the report was released. The investor report doesn't discuss fourth quarter sales leading up to and after the show.

 

https://www.businessinsider.com/victorias-secret-closing-20-stores-2018-8

 

They need there own version of Tom Ford to take over. Gucci definitely knows how to choose there talent. 

Or they are targeting the wrong demographic, (teens and tweens/College students) and their quality doesn't appeal to the demographic they should be targeting, (women aged 25-40).

 

Their quality doesn't warrant their price and half their marketing doesn't appeal to women above the age of 25 and those under 25 are to busy spending money on university and/or booze.

 

2 minutes ago, DULOVEMEDO said:

VS announced to close 20 stores the same day or around the same time the report was released. The investor report doesn't discuss fourth quarter sales leading up to and after the show.

 

https://www.businessinsider.com/victorias-secret-closing-20-stores-2018-8

 

They need there own version of Tom Ford to take over. Gucci definitely knows how to choose there talent. 

Also closing store fronts isn't as detrimental or alarming as some might think. A lot of sales are moving towards online as it's cheaper for the company and online sales are generally increasing across the board for most companies. People don't want to go shopping anymore, why go out when you can do it from the comfort of your own home, or while killing time on the bus or subway.

9 minutes ago, Clauds said:

It has very little (or does it?) to do with the show but I think one of the biggest fuck ups VS has done in recent years was getting rid of catalogs tbh, they were iconic and a constant visual reminder of the stores that made me want to go shopping, I'm usually too lazy to go to the stores or shop online on my own, but by getting the catalogs all the time I would find something I'd like and be like I'm gonna go get it! And then I'd spend more money in the store than what I had planned originally. I think getting rid of the catalogs lowered the brand's presence in households, therefore lowering people's interest in the brand.

 

I agree with Pinky, this show ain't getting cancelled by 2020, maybe by 2025 but 2020 is too soon, I do see some major budget cuts and heads rolling if ratings take another 25% dip this year tho

 

I do think they over did it with the catalogs especially the Sales & Clearance ones (not the Semi-Annual Sales) but to get rid of it all is pretty lame. They should at least put out a holiday catalog! I think they should send out catalogs seasonally, plus the holiday one, so that is about 4-6 catalogs a year

HBR (Harvard Business Reports) have already proven that discounts and sales do not promote customer loyalty and decreases brand equity. Like someone point out in this thread VS is operating on an old marketing strategy and slow/but horribly catching up to the new age of marketing. 

7 minutes ago, PinkCouture said:

 

THIS!!!!

 

I also think they are not appealing to a wide range of consumers.

 

What do you mean by that? Age, race, body type? Or more what styles they carry?

3 minutes ago, phenobarbie said:

Or they are targeting the wrong demographic, (teens and tweens/College students) and their quality doesn't appeal to the demographic they should be targeting, (women aged 25-40).

 

Their quality doesn't warrant their price and half their marketing doesn't appeal to women above the age of 25 and those under 25 are to busy spending money on university and/or booze.

The thing is even though they're attempting to target teens and young adults they're doing a terrible job of it. It's still not ~cool to own VS at that age like it once was. Millennials are also extremely difficult to tap into so if they can't even perfect a strategy for teens, idk how they'd get the older adults. It also all comes down to their shitty products. 

Just now, Sanni said:

 

What do you mean by that? Age, race, body type? Or more what styles they carry?

 

All of the above but specifically age and body types

2 minutes ago, DULOVEMEDO said:

HBR (Harvard Business Reports) have already proven that discounts and sales do not promote customer loyalty and decreases brand equity. Like someone point out in this thread VS is operating on an old marketing strategy and slow/but horribly catching up to the new age of marketing. 

It's because they wont clean house, which is why I'd prefer another steep decline in viewership. Maybe that would finally prompt some major cuts.