A 'scary' development is taking place at Victoria's Secret
Getty Images/John Parra
- L Brands' Victoria's Secret is breaking its brand image and losing pricing power, according to Jefferies.
- Pink is now more promotional than core Victoria's Secret.
- Watch L Brands trade in real-time here.
Victoria's Secret owner L Brands is breaking its brand image by selling cheap underwear.
Body By Victoria bras, the company's top bra franchise, is now offering a "buy 2 get 1 free" promotion. Its Pink branch, which targets younger women, is running even deeper promotions and just announced $3 panties for members this past weekend. In the eyes of Jefferies analyst Randal Konik, this is a "scary" development.
"Our panty price tracker for over a decade shows this is the lowest ever price point for panties across VS or PINK," Konik wrote in a note out to clients on Monday. "We believe it shows how desperate the company is to drive consumer traffic and also shows how soft demand for PINK has become."
Pricing power continues to erode as the brand extends more and more promos and yet the consumer still isn't responding. It's a major red flag considering Pink is a $3 billion business and accounted for all of Victoria's Secret's segment growth over the past 5 years, Konik added.
"Victoria's Secret brand is broken and PINK is now breaking," Konik reiterated in Monday's note.
Konik has $23 price target - about 30% below where shares are trading - and remains "underperform" on the retailer.
L Brands is set to announce its second-quarter results on Wednesday, with Wall Street expecting $0.35 a share on revenue of $2.96 billion.
Shares are down 45% this year.
NOW WATCH: How Columbia House sold 12 CDS for $1
- I'm a 56-year-old IT worker who got laid off last year and have been unemployed ever since. I have a hunch I'm not finding work due to ageism. How do I prove it?
- WhatsApp introduces the “Message Yourself” feature, working on voice status updates and more
- DeSantis says Congress should act if Apple follows through on Elon Musk claims and bans Twitter from App Store
- Indian markets open tad higher ahead of GDP data -- Zomato, SBI, NDTV, Britannia Industries among stocks to watch
- Government lifts ban on organic non-basmati rice exports
- Scientists revive 48,500-year-old zombie virus buried under a frozen lake in Russia
- India Inc.’s rockstars of Q2 and things that investors should look out for, according to analysts
- Best refrigerator under ₹15000