Victoria’s Secret UK collapses into admin work

The Victoria’s Secret UK business has been placed in administration – and it is not just a victim of the Covid-19 crisis, says one analyst.

Echoing concerns expressed in the brand’s US home market, Sofie Willmott, lead retail analyst at GlobalData, said Victoria’s Secret has lost its appeal to its target demographic.

“Despite being a desirable, yet expensive, underwear brand when it launched in the UK in 2012, Victoria’s Secret has since lost its appeal for many shoppers due to a lack of inclusivity. Its famous catwalk show was canceled last year after much debate but for many of its target customer base, it was too little too late and they had already gone elsewhere.”

The Victoria’s Secret UK business has 25 stores, now all at risk of closure. A staff of 785 employees have been furloughed during the process.

“This is yet another blow to the UK high street and a further example of the impact the Covid-19 pandemic is having on the entire retail industry,” said Deloitte joint administrator Rob Harding in a statement.

“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.”

In the US, L Brands, parent of Victoria’s Secret, plans to close about 250 stores to right-size the business. A large question mark hangs over its flagship stores internationally, including in Asia and a strategic review has been launched into the brand’s presence in China.

Willmott said the administration is yet another blow to retail landlords as clothing & footwear spend continues to shift online. The company’s UK e-commerce business is unaffected by the process, with the brand to continue selling online only with lower overheads, “piggybacking on its US operations”.

“With Victoria’s Secret stores primarily in flagship shopping-center locations including Bluewater, Westfield Stratford and Birmingham Bullring, the administration brings more bad news for landlords that are struggling to collect rent payments.”

The administrators of Victoria’s Secret UK are seeking a buyer, however, given the state of the brand’s perception in the marketplace, its troubled prospects globally and the crisis the broader UK retail industry finds itself in post-Covid-19, it is difficult to perceive a quick white-knight rescue.