In the first quarter of 2024, Victoria's Secret, an American lingerie retail brand, began to lose money again
On June 5th local time, Weimi released its financial report for the first quarter of the 2024 fiscal year. In the 13 weeks ending May 4, 2024, the company had a net loss of $4 million (approximately RMB 29 million), compared to a net profit of $1 million (approximately RMB 7.24 million) in the first quarter of 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%, compared to an 11% decline in the same period last year.
Weimi expects its revenue to continue to decline by a low single digit in the second quarter of 2024, while its gross profit margin remains unchanged. The revenue for the 52nd week of fiscal year 2024 is expected to reach $6 billion (approximately RMB 43.5 billion), a single digit decrease from fiscal year 2023. Based on this revenue forecast, the operating income for the fiscal year 2024 is expected to be between $250 million and $275 million (approximately RMB 1.8 billion to RMB 2 billion).
Virgin CEO Martin Waters stated in a conference call after the financial report was released that this performance is already higher than the preliminary results previously announced. The company will focus on strengthening its core, stimulating growth, and changing the company's foundation as these three long-term strategic pillars.
Since leaving its parent company L Brands and going public independently in 2021, Weimi, which has made bold reforms, has been in a state of poor performance. Its revenue has been declining for two consecutive years in fiscal years 2022 and 2023.
As always, Weimi attributed the decline in performance to the sluggish North American lingerie market. At the aforementioned conference call, Weimi stated that North American business is becoming increasingly challenging. External market data shows that compared to last year, the overall lingerie market revenue in North America decreased by a medium to high single digit in the first quarter.
However, Vimi's market share in the North American lingerie market is still around 20%, but this figure has declined significantly compared to Vimi's market position of over 30% in high gloss moments.
But in the financial report, Weimi also pointed out that although the net sales of North American stores in the first quarter decreased by 7.2% year-on-year, and direct sales decreased by 3.4%, the international market business revenue increased by 15.6% year-on-year. Especially in the Chinese market, there has been excess growth in digital channels, empowering physical stores.
It is worth mentioning that in 2022, Weimi and domestic lingerie manufacturer Weijin established a joint venture to jointly operate the brand's business in China. Virgin provides supply chain research and development and production capacity, while Vimi leverages the advantages of brand commercial marketing operations.
Recently, in order to strengthen the aesthetic connection with local Chinese consumers, Weimi has also partnered with Chinese independent designer brand Susan Fang to launch a designer collaboration series. This is also the second consecutive year that Weimi has launched Chinese designer collaborations.
In the 2024 618 Tmall Open Red Underwear Store Sales List, Weimi ranked third. This is indeed a good achievement for Vimi, but if you see that the top two are Chinese domestic brands Ubras and Banananain, which have only been established for 8 years, Vimi may not be able to laugh.
With the support of local supply chain capabilities and e-commerce marketing channels, the Chinese lingerie market is constantly evolving its own "security".
According to the Tiktok 2023 underwear industry trend insight report released by Qifei, a content e-commerce service provider, the GMV of Tiktok underwear market will exceed 13 billion yuan in 2023, with a year-on-year growth of 95.0%, showing a rapid growth trend. Among them, in the first half of 2023, the top two women's bras were the well-established Hong Kong lingerie brands Maoren and Weimi. But based on the total sales in the first half of the year, the sales revenue of Weimi is about 332 million yuan, and the domestic brand Maoren is about 308 million yuan.
From the perspective of brand hot selling products, the prices of Weimi's hot selling items are all above 200 yuan, while the prices of Maoren's hot selling items are all below 100 yuan. But Weimi actually has a sub brand PINK that is more affordable and has a younger image, but PINK has always been shrouded in the halo of the main brand, and its presence is not strong.
Whether in North America or in the international market represented by China, Weimi faces a reality that no matter how much it transforms, it may not be able to return to the glory of being the "underwear hegemon" of the past, as more and more new brands have taken away the cake.
That's also why Weimi has started to make up for its shortcomings through local cooperation and acquisitions. In early 2023, Weimi acquired Adore me, an online lingerie brand in the United States.
Adore Me has only been established for 9 years, but unlike ViMi, its advantage lies in its experience and technology in online operations. In the first quarter, Adobe Me's sales increased by 5%, and ViMi plans to use the brand's online technology to achieve digital home fitting and membership services for the ViMi and PINK brands.
Another aspect of investing heavily in digital technology is the gradual streamlining of offline channels.
In 2024, the Weimi North American market is expected to decrease by 23 to 27 stores, the number of directly operated stores by Chinese joint ventures is expected to decrease by 5 or increase by 2, and the number of franchise and cooperative stores is expected to increase by 32 to 55. This means that on offline channels, Weimi is adopting a lighter operational approach.
Even if opening an offline store, Weimi will still focus on exploring overseas markets. Martin Waters stated in his first quarter financial report that in order to "stimulate growth," he plans to add 100 stores in the international market and enter several emerging markets in the next two years.