On June 5th local time, Victoria's Secret (VSCO. N) released its Q1 2024 financial report. As of May 4, 2024, the company had a net loss of $4 million (approximately RMB 29 million) in the 13 weeks ended, compared to a net profit of $1 million (approximately RMB 7.24 million) in the same period last year. The total revenue also decreased from 1.41 billion US dollars (approximately 10.2 billion yuan) in the same period last year to 1.36 billion US dollars (approximately 9.85 billion yuan). In addition, comparable sales in the first quarter decreased by 5%, an improvement from 11% in the same period last year.
Weimi expects its revenue to continue to decline in low single digits in the second quarter of 2024, while its gross profit margin is expected to remain unchanged. For the entire fiscal year 2024, Vimi expects its revenue to reach $6 billion (approximately RMB 43.5 billion), a decrease from the fiscal year 2023, while operating revenue is expected to be between $250 million and $275 million.
Virgin CEO Martin Waters stated in a conference call after the financial report was released that despite a slight decline in performance, it has exceeded the company's preliminary performance previously announced. The company will continue to focus on strengthening its core business, stimulating growth, and changing the company's foundation as three major long-term strategic pillars.
Since leaving its parent company L Brands for independent listing in 2021, Weimi has been undergoing reforms, but its performance has been lackluster. The revenue of fiscal years 2022 and 2023 has been declining for two consecutive years. Weimi attributed the decline in performance to the sluggish North American lingerie market, but its international market revenue increased by 15.6% year-on-year, especially with the Chinese market achieving excess growth in digital channels.
The Victoria's Secret brand can be said to have become widely known in China through its annual supermodel show. For many people, compared to the product itself, the exciting appearances, gorgeous costumes, and iconic wings of the models at each big show are more eye-catching, and Weimi quickly became a hot topic on the internet at that time.
In 2017, the Weimi Show made its debut in Shanghai, and the participation of seven Chinese supermodels, especially Xi Mengyao's wrestling incident, once pushed Weimi's attention in China to its peak. However, after the peak, the momentum of WikiLeaks began to gradually decline, and in 2019, due to a significant decrease in ratings, the WikiLeaks show had to be discontinued. Afterwards, the discussion of the brand also decreased, and even some consumers in lower tier cities told Blue Whale Finance reporters that they had not heard much about the discussion of confidential information.
Under the global trend of "de sexization", emerging domestic lingerie brands have abandoned traditional steel ring design and instead emphasized wearing comfort.
In 2016, domestic and foreign brands launched the entry-level "Zero Sensitivity" series for 169 yuan, which quickly became a hot selling item for the brand; The Shonai brand has launched its iconic "no sense label" lingerie; In the same year, the Ubras brand was established in Beijing and successfully topped the Tmall Double Eleven lingerie sales chart just four years later.
Weimi China has clearly noticed a shift in market trends and is beginning to reshape its sexy image through a series of brand strategies.
In 2020, Weimi announced that Zhou Dongyu and Yang Mi would become brand spokespersons for the Asian region, conveying a signal of breaking the traditional definition and stereotypes of sexiness; In 2021, it was announced that Yang Naina was a close friend of the brand, and for the first time, "oversized models" were introduced in China.
However, relying solely on brand level marketing activities while claiming to break the boundaries of sexiness while continuing to sell traditional sexy lingerie products seems insufficient to truly achieve a transformation of brand image.
During the fiscal year 2020 (as of February 1, 2020) to the fiscal year 2021 (as of January 30, 2021), ViMi China's business incurred losses of HKD 669 million and HKD 109 million, respectively. "The world is changing, and our response speed is too slow. We need to shift our focus from male preferences to female needs," admits Martin Waters, CEO of WeChat
In 2022, Chinese lingerie manufacturing giant Virgini acquired 49% of the shares of Weimi China for $45 million to jointly operate the brand's China business with Weimi and carry out a more thorough localization transformation.
In March 2022, Weimi and Virgin launched their first domestic product, the "Double Size Jelly Striped Tank Top"; In September, Weimi China and Tmall Underwear and New Product Innovation Center (TMIC) collaborated to launch the "Anti Gravity Bra". This localized product design strategy has quickly received a positive response in the market.
In the 2022 Tmall 618 Shopping Festival, Weimi entered the top ten of lingerie sales for the first time; In the same year's Double 11 Shopping Carnival, Weimi's sales reached 120 million yuan, a year-on-year increase of 121%; At the 618 Shopping Festival in 2023, Weimi's sales followed closely behind Uras, Jiaonei, and Youkeshu, climbing to fourth place on the Tmall lingerie sales list.
Until the mid year success event of 618 this year, Weimi finally ranked third on the lingerie store sales list. For Weimi, this is indeed an encouraging achievement. However, the top two brands on the list are still Chinese domestic brands Ubras and Bananaain Banana, which have achieved such results in just 8 years of establishment. It is hard to say how pleased Vimi is.
Tmall Official
Regarding this, Cheng Weixiong, a senior brand management expert and founder of Shanghai Liangqi Brand Management Co., Ltd., told Blue Whale Finance reporters that Weimi did not adhere to its brand positioning, and even if its localized products sell well, it is of little significance. Because this is no different from authorizing label products, as an international brand, Weimi's sexy style is not popular in China. After transformation, it is similar to domestic brands in China, and its brand value is no longer. This makes it unable to return to its previous position as the "underwear hegemon" in both the local North American market and overseas markets represented by China.
As of 2023, Weimi has a total of 72 stores in mainland China, including all category stores and beauty and accessories stores. Among them, stores in second - and third tier cities account for nearly a quarter. The Weimi plan aims to accelerate the layout of second - and third tier cities, as well as airport channels, with the goal of opening 100 new stores by 2025, with a focus on opening lightweight stores ranging from 300 to 400 square meters.
Weimi expects to close 23 to 27 stores in the North American market by 2024. In China, the number of direct operated stores of joint ventures may decrease by 5 or increase by 2, while the number of franchise cooperation stores is expected to increase by 32 to 55.
In addition to the sinking and lightweighting of its stores in the Chinese market, Martin Waters also stated at its recent quarterly financial report meeting that Weimi will focus on expanding into other overseas markets and entering some emerging markets.