Victoria's Secret Is Leaning More Into Comfort — and Women Are Taking Notice

• Shoppers may be hard pressed to believe that Victoria's Secret's new lingerie lineup is actually from Victoria's Secret.
• In mid-February, the retailer unveiled its latest collection of bras and panties, known as Love Cloud. The line is focused on all-day comfort, with minimal frills, the company said.
• Victoria's Secret is set to report its fiscal fourth-quarter results after the market closes on Wednesday.

At first glance, shoppers may be hard pressed to believe that Victoria's Secret's new lingerie lineup is actually from Victoria's Secret.

In mid-February, the retailer unveiled its latest collection of bras and panties, known as Love Cloud. The line is focused on all-day comfort, with minimal frills, Victoria's Secret said. The company also selected women of diverse backgrounds and body types — including its first-ever model with Down syndrome, Sofia Jirau — to star in the collection's marketing campaign.

The launch of Love Cloud is yet another sign Victoria's Secret's is serious about working to overhaul its image — from racy and exclusive to tasteful and inclusive. And, importantly for skeptical investors, it could help to propel sales in the coming quarters. Victoria's Secret shares are down more than 4% year to date. The stock has fallen more than 20% over the past six months, bringing the retailer's market capitalization to $4.8 billion.

Revenue at Victoria's Secret in 2020 tumbled 28% to $5.4 billion from $7.5 billion a year earlier, due in part to Covid-related store closures and hampered consumer demand. The company could provide more details when it reports its fiscal fourth-quarter and full-year results after the market closes Wednesday.

The shift by Victoria's Secret also comes as women seek to incorporate more comfortable items into their wardrobes, even as they return to social settings, including going to the office. Analysts appear to be in favor of Victoria's Secret's push to get the basics right.

That means the company is going back to the drawing table for new merchandise, according to Victoria's Secret's design chief.

"We see innovation back in our business," Chief Design Officer Janie Schaffer said in an interview.

A company veteran, Schaffer rejoined Victoria's Secret in 2020 following a stint at British department store chain Marks & Spencer. Schaffer brought in a new team to bring a fresh perspective on the business. It appears to be a successful move in the early going.

Schaffer's appointment also notably came during a broader shake-up at Victoria's Secret. Martin Waters, former head of L Brands' international division, was tapped in late 2020 to be chief executive of Victoria's Secret. At the time, the company also announced a new chief human resources officer and executive vice president of North America store sales, who were tasked with improving employee morale and winning customers back.

This was all shortly before Victoria's Secret split from Bath & Body Works to become a separate publicly traded entity, in August.

Since then, Schaffer has played a key role in creating Love Cloud, which she described as "the most comfortable bra in the world." It's a stark divergence from the wire-filled and padding-packed bras that Victoria's Secret has debuted in the past.

"In the short time that I've been back in the business, we have brought out a maternity nursing bra ... we have brought out a mastectomy bra," she said. "Really acknowledging women in every in every stage of their life. That's what's driving all of us."

The company has, meantime, been in the process of remodeling its retail stores around the United States to bring in fresher fixtures, lighter paint on the walls and mannequins of all shapes and sizes to welcome customers inside. Victoria's Secret has said it plans to touch up all of its roughly 1,400 locations globally, in the coming years. It's also testing a smaller, off-mall format.

Signs of an improving image

One recent survey found that women are increasingly paying attention to Victoria's Secret's turnaround.

Bank of America polled 1,000 women between the ages of 18 and 65 in January and found the respondents had fewer complaints about Victoria's Secret compared with pre-pandemic.

Thirteen percent of women said they liked Victoria's Secret better than they did pre-Covid, while 23% liked it less, and 64% had no change in opinion, BofA found. The firm noted that this is improved from 2019 levels, when 33% of respondents in a similar survey said they liked Victoria's Secret less over the past 12 months, with many women citing poor brand image.

BofA also found that the PINK brand, a division within Victoria's Secret that caters to younger females, has maintained its brand image more steadily in recent years. The biggest complaint among consumers for PINK, the firm found in the same survey, is higher prices.

"Victoria's Secret's brand overhaul appears to be working," BofA analyst Lorraine Hutchinson said in a note to clients. "Victoria's Secret's resumption of bra launches is a key strategic change and is crucial to building share."

Choosing comfort

By launching Love Cloud, which includes bras in six different silhouettes, Victoria's Secret hopes to appeal to women of all ages who are looking for reasonably priced, everyday lingerie.

Kristen Classi-Zummo, a fashion apparel industry analyst for NPD Group, said women are increasingly seeking out comfort-fitting bras, including sports bras, for day-to-day wear. Total bra sales in the U.S. grew 6% in 2021 compared with 2019 levels, according to NPD. Within that figure, sports bra sales surged 43%, and nonsports bras were up 7% on a two-year basis. The latter category includes wire-free bras, such as the ones Victoria's Secret launched as part of Love Cloud.

"There's been this fundamental shift in the types of bras women are looking for," she said. "We've all shifted to a more comfortable and more casual wardrobe ... and that's ultimately affecting what we wear underneath those clothes."

To be sure, Victoria's Secret also competes with a number of up-start brands such as ThirdLove and Lively, as well as American Eagle's Aerie division, which sell a large selection of comfort-focused bras including sports bras and bralettes. And from the start, these retailers have been more inclusive in their marketing to consumers.

Jane Hali & Associates retail analyst Jessica Ramirez said she's noticed Victoria's Secret has become more inclusive, with its selection of merchandise in stores and online spanning more sizes and with the retailer's models appearing to be less retouched in images.

Earnings snapshot

In the near term, however, ongoing supply chain constraints may overshadow the progress the company has been making, Ramirez said.

Victoria's Secret is set to report its fiscal fourth-quarter results after the market closes on Wednesday, where it should shed light on the supply chain topic and discuss any financial implications of the recent Love Cloud launch.

The company in late December reaffirmed its previous guidance that called for sales to be flat to up 3% compared with the prior year's $2.1 billion. It sees diluted earnings per share in a range of $2.35 to $2.65.

Analysts are expecting earnings to be on the high end of that range, at $2.64 a share, and for sales to amount to $2.14 billion, according to a Refinitiv survey.