Parent company L Brands is eager to get rid of it, and new buyer Sycamore wants to repent. With the decline, can the two new spokespersons of Victoria Secret bring some changes?
Editor’s note: This article comes from the WeChat public account “BoF Fashion Business Review” (ID: Business_of_Fashion) .
OF: Irina Li & Chantal Fernandez
Edit: Queennie Yang
Columbus, USA-Yesterday, Victoria ’s Secret officially announced that Chinese actor Yang Mi will be the brand ’s spokesperson for Asia. Just 3 days ago, the new Chinese actor Zhou Dongyu was just appointed as the brand’s spokesperson for Greater China. Unexpectedly, the two newly appointed voices just fell off, but Wei Mi was once again in crisis.
The day before yesterday, private equity firm Sycamore Partners filed a lawsuit in the Delaware court in the United States, hoping to terminate the previous Victoria Secret acquisition deal with Victoria Brand parent company L Brands. The company believes that during the epidemic, Victoria’s large-scale closure of stores, refusal to pay rent, and temporary layoffs have caused immeasurable damage to the brand.
This acquisition agreement was only formally finalized in February this year. Sycamore originally planned to acquire 55% of Victoria’s shares at a price of US $ 525 million. However, the impact of the epidemic on the retail industry and fashion industry has greatly reduced the original valuation of many transactions. Douglas Hand, who works at New York law firm Hand Baldachin & Associates LLP and specializes in transactional business, told BoF: “The value of retail companies and brands is at a historically low level.”
At present, it is very difficult to stabilize the company ’s own operations, and it is even more difficult to take over a controversial brand whose performance is declining and becoming increasingly sluggish. Since the transaction agreement does contain potential clauses related to the epidemic, Sycamore’s appeal will likely become a reality. Bernstein analyst Jamie Merriman predicted in the report that Sycamore will pay L Brands a breach fee for this.
L Brands subsequently issued a statement stressing that it will use all possible measures to compete against it in the court and will strive to continue the transaction. Between the two partiesThe disputes are increasing. Sycamore previously requested to obtain the relevant financial information of Victoria Secret during the epidemic in order to renegotiate the transaction price. L Brands refused to share any information and said that it will not consider changes to the established transaction terms.
Although it is not yet certain whether the transaction will actually break down, the already devastated Wei Mi and its parent company are clearly hit again. “Sycamore is an ideal choice for them,” said Susan Anderson, an analyst at financial company B. Riley. “Besides, it is difficult for them to find other buyers.”
L Brands, with more than $ 5 billion in debt and a $ 2.5 billion lease, originally expected the deal to ease its operating pressure a little. After the news of the transaction or the coming out, the share price of the Wei Mi brand also fell by 25% on Wednesday, and it has fallen by 60% this year.
Since then, Victoria Secret has been in an extremely awkward position-the parent company L Brands is eager to get rid of it, and the new buyer Sycamore intends to repent. But it is undeniable that, after becoming more depressed and falling into losses, in order to reverse the brand image and win back to the consumer market, Wei Mi has recently taken many new measures.
● Wei Mi ’s latest inclusive ads | Image source: Brand
In August 2019, Wei Mi hired Valentina Sampaio, the first transgender model. In October, the brand collaborated with British model Ali Tate-Cutler and appeared for the first time in a large-scale figure in physical store advertising. On March 20 this year, Wei Mi released the most inclusive advertisement to date, including large size models, transgender models, and 50-year-old “older” models. But the timing of the choice was not ideal-shortly afterwards, Wei Mi closed all stores and online official websites in the US and Canada markets due to the epidemic.
In terms of performance, the inclusive transformation strategy adopted by Wei Mi has not yet worked. In the latest quarter as of February 1, this year, Wei Mi’s sales remained sluggish, down 10% year-on-year. Nevertheless, Victoria’s efforts continue.
The Chinese market that Wei Mi did not cultivate deeply but has great potential may be their life-saving straw. According to data from Ai Media Consulting, the size of China’s underwear market in 2019 is about 200 billion yuan, of which the female underwear market accounts for the totalMore than 60% of the market size. Only in 2017, Wei Mi, who officially entered China and opened a full range of physical stores in the mainland, still has room for development. Compared with its 909 stores in the US market, it currently has only 67 stores in China.
In the two appointments issued to Zhou Dongyu and Yang Mi, Wei Mi emphasized that the future will “inspire women to have a positive and optimistic attitude and self-confidence, break through the traditional sexy, and interpret more diversified new meanings of sexy.” . Unlike in the past, this is the first time Wei Mi has adopted non-supermodel stars as brand spokespersons in China.
Obviously, Victoria’s Secret is actively disseminating “inclusive” signals to the outside world. From the “perfect” sexy represented by the Victoria’s Secret Angel to the “confident” charm that Zhou Dongyu and Yang Mi present now, despite being late for a long time, Victoria’s Secret is trying to keep up with the change in the style of underwear of female consumers.
CBNData’s “Top 10 New Tracks in the Consumer Field 2019” report shows that with the awakening of women’s autonomy, Chinese women’s groups have a more liberated and diversified mental and physical needs, “sexy” and “enchanted” The aesthetics of female underwear led by male vision has been gradually replaced by the aesthetics led by female vision such as “true self” and “natural”. Underwear brands with a single interpretation of the perfect body are becoming outdated.
● Zhou Dongyu ’s advertising campaign for Wei Mi | Image source: Brand
Accelerating the pace of transformation is not only an effort by Wei Mi to meet market demands, but also to continue to bet on the Chinese underwear market. In particular, Victoria’s own development has faced many crises: the impact of the epidemic on retail performance; the continued shrinking US market share; shaky acquisition transactions; lingering sex scandals and stereotypes of women.
The data from the Prospective Industry Research Institute shows that the current per capita consumption level of Chinese women ’s underwear is still low, which is significantly different from that of developed countries in Europe and the United States. The per capita consumption differs by more than US $ 50. There is still much room for improvement in the Chinese women ’s underwear market.
In order to further stabilize the leading position in the basic market of the “full”, “high-end” and “traditional sexy” crowds, Wei Mi aimed at the more mature style of Yang Mi, while the relatively young popular “small flower” Zhou Dongyu, then This is the first step in Victoria’s attempt to occupy young and teenage consumer groups. CBNData and Tmall underwear released the “Lingerie Industry Trends Research” released last year togetherIn the ranking of the best-selling underwear brands among the young female consumer groups in China, Wei Mi ranked 7th, and it ranked behind 10 among the girl crowd.
However, it should be noted that trying to remedy the shortcomings and win back the consumers is not just a new spokesperson. Taking Guan Xiaotong’s cooperation with City Beauty as an example, after the brand made a series of new advertising and promotion strategies around the new spokesperson, City Beauty’s performance has not improved, and its 2019 performance loss has hit a new low since its listing in 2014. This year, the group had to announce transformation and health and personal care related products in order to seek more differences.
In the Chinese market, online students such as Neiwai and Zhuyi have penetrated into young female consumer groups and have a loyal audience. American Internet underwear brand ThirdLove and Rihanna’s own brand Savage x Fenty also received positive and positive market feedback. More diversified brands and product designs are dividing up the market share of female underwear. And to regain the city, the development of Victoria’s retail channels in China also needs to actively accelerate the pace-but obviously this is a paradox with the current capital flow crisis of its parent company.
While the future of the acquisition is uncertain, the new spokesperson is a continuation of Wei Mi ’s recent “self-help” strategy, but I am afraid that it will not be able to save the brand from the fire.