Mon, 08 Jun 2020 | ADMINISTRATION
The UK arm of lingerie retailer Victoria’s Secret has gone into administration, with Deloitte calling the news another example of COVID-19’s impact on the UK high street. Deloitte is handling the company’s administration and will undertake a “light touch” administration, enabling the company management to continue running the business while a buyer is sought.
Victoria’s Secret has 25 stores in the UK, all of which have been closed under the government’s COVID-19 lockdown rules, and employs 785 staff who have been furloughed through the coronavirus job retention scheme since stores closed in late March.
Company CEO Stuart Burgdoerfer said administrators would "seek to restructure the UK lease terms, explore options for a sale of that portion of the business, or other alternatives." The company added that its international stores would be unaffected and that its online store would remain operational in the UK.
Joint administrator Rob Harding said: "The effect of the lockdowns, combined with broader challenges facing bricks and mortar retailers, has resulted in a funding requirement for this business, resulting in today's administration.”
“We will now work with the existing management team and broader stakeholders to assess all options available for the future of the business. As administrators we'd like to thank them and all of the employees for their support, at what we appreciate is a difficult time."
However, the company’s troubles date back long before the current pandemic. In the year ending February 2019, the UK arm registered an operating loss of £170 million as it was hit by changing tastes among customers and lower high street spending. At the time of its last financial statement, Victoria’s Secret UK had total assets valued at around £116 million.
Victoria’s Secret has also long been accused of sexism and a lack of diversity in its campaigns and fashion shows. Its 2019 fashion show was cancelled, with the company citing low television ratings, and its parent company L Brands has previously spoken of the company’s need to “evolve”.
Qing Wang, Professor of Marketing at Warwick Business School and an expert in luxury brands, said: "Victoria's Secret was a huge success story, but it has become synonymous with sexism, the objectification of women, and a lack of diversity."
"Being glamorous, sexy, and 'over the top' is not a problem in itself. These characteristics define many other iconic fashion brands such as Tom Ford, Abercrombie & Fitch, and Alexander McQueen. As a brand Victoria's Secret has personality, what it lacks is substance and commitment.
"Every brand needs a narrative to communicate to the customers and the general public. In the case of Victoria’s Secret, the main communication channel has been the annual fashion show. It was once a major pop culture event, drawing millions of viewers each year. It was an important aspect of the brand’s success story and a remarkable marketing achievement."
"However, times have changed and the same show that brought the brand so much success has, more recently, contributed to its demise. It has not kept pace with the strong values of millennials and post-millennials, who should now be the company's target customers."
"While the public have voted with their feet by abandoning Victoria's Secret, their appetite for the supermodels the brand created - such as Tyra Banks, Heidi Klum, and Miranda Kerr - has not wavered. That shows it is a wider lack of purpose that is the key problem, rather than individual elements of the brand."
"If the UK arm of Victoria's Secret is to be saved, it needs a new start and a major overhaul of its brand and marketing strategy. It needs to be brought up to date to reflect the values of gender equality, sustainability, and diversity that appeal to today's shoppers and compete with the brands that have overtaken it."
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