Key Takeaways and Trends From L Brands’ Q4 Earnings
Key trends from L Brands’ fourth quarter earnings are outlined below:
Segment-Wise Performance with Outperformance by Bath and Body Works segment – The decline in traffic in brick-and-mortar stores has been a major cause of concern for VS. The company is making attempts to improve its understanding of customers’ demands in order to make the products more relevant and relatable to them. Also the company has arranged to sell Victoria’s Secret items at a deep discount, but consumers have not been very responsive.The company has also focused on more efficient teams, strengthening its core brassiere business with new innovations in line with fashion trends, and focusing on the holiday seasons.
Strong performances by the company’s home fragrance assortment drove that segment’s sales and hence Bath and Body Works’ sales have increased by double digits. This segment has seen steady growth over the last few years and is likely to increase in FY2019 as well.
Growth in Online Sales – Driven by the growing trend of online shopping, online sales of the company rose in every geography underlining this to be a global trend. The online channel comprises of the company and retailer websites. L Brands is seeing very strong momentum in online sales growth with online revenue for VS and Bath & Body Works increasing. With rising disposable incomes and people continuing to spend more online, this channel constitutes an increasing share of the company’s top line.
Focus on delivering a differentiated customer experience aids growth – L Brands continues to revamp business by improving the store experience, localizing assortments, and enhancing direct business. These measures will facilitate it to generate incremental sales and increase store transactions through higher conversion rates. A sustained focus on cost containment, inventory management, merchandise, and speed-to-market initiatives has kept L Brands afloat in a competitive environment.
Growth in International Sales – With their sights set on the global marketplace, the international business has become a source for long-term growth and increased sales volumes. The company continues to spend a lot of money to grow the business in the Asia region (esp. China).
Looking ahead, we believe that driven by the above trends the company is focused on improving performance in the Victoria’s Secret business, staying close to its customer, improving the customer experience in stores and online, and improving assortments in compelling new product launches with steadier footing in the remainder of FY2019.
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