Is The World's First Underwear Brand Going Bankrupt?

It's time to make us look forward to moving towards the scale of billions of dollars. The world's largest underwear giant Victoria 's Secret Vitoria's VS has gone bankrupt.

VS's sexy wind for many years was encircled and encircled by the #Metoo under the tide of Hollywood in 2017. VS, the world's live broadcasted Carnival lingerie show, has been on the decline for the past three years after being accused of feminism and masculinity. Sales of the same store continued to plummet, opening up a large-scale store closing mode, and preparing for the end of the annual underwear show, the last straw that overcame its brand value fell this month.

In July 25th, VS parent L Brands Inc. (NYSE:LB) officially announced that it would hire lawyers from the outside to thoroughly investigate the relationship between Jeffrey Epstein Jeffrey Epstein and the company. However, the underwear and beauty giant claimed that Epstein had been the personal financial manager of the company's largest shareholder, chairman and CEO Les Wexner, but the two had ended their cooperation 12 years ago, and that Epstein had not been employed by the company or authorized representative of the company.

In July 6th, Epstein was arrested on suspicion of sexual assault and organizing sexual transactions among underage girls. A large number of famous political and business circles in the United States were involved, including the incumbent president Trump, and VS boss Les Wexner was the most closely related figure. He once said "Epstein is always the most loyal friend" when he interviewed Epstein.

The investigation of external lawyers may not affect Les Wexner's position in L Brands Inc. in any way. After all, the former American Cowboy brand Guess Inc. (NYSE:GES) boss Paul Marciano was announced to step down after being accused of sexual harassment, but instead of blowing up CEO and continuing to stay in the company, Liu Qiangdong, the founder of Jingdong, was involved in a sexual assault case in the United States, and the Jingdong board has so far been indifferent.

However, the growing number of consumers against VS may finally make Les Wexner and its controlled companies passive choice. After all, the elites of the United States are far more demanding and standard in moral and political correctness than the "elite" society in which money talks.

At the same time, Les Wexner and its control of L Brands Inc. are far from the trouble. Since Wednesday, nearly 20 American law firms, including Robbins Geller Rudman & Dowd LLP, Kahn & amp; Kahn, etc., have launched an investigation into the company to prosecute false and misleading statements of the underwear and beauty giant. When L Brands Inc. announced its three quarter earnings in fiscal 2018 in November 19, 2018, it announced a half dividend reduction, after which the management of the company promised that it would not cut dividends. The news of the dividend cut made the share price of L Brands Inc. plummeted by 18% on the same day, so that investors who believed in L Brands Inc. did not reduce their dividend during May 31, 2018 to November 19, 2018 suffered losses.

In fact, investors who started investing in L Brands Inc. in 2018 have already been lucky. Since early 2016, when they announced their withdrawal from the core business of swimwear restructuring, L Brands Inc. shares had plunged 3/4. The main reason is that VS's traditional underwear and traditional lingerie propaganda strategy is completely ineffective.

Since the middle of 2016, L Brands Inc. has released monthly data, and the company's stock price will fluctuate violently, of course, it will fall more or less. Until the beginning of this year, L Brands Inc. had secretly ceased the disclosure of monthly data. Since February 2019, the company has not disclosed a monthly data.

The total sales of VS reached the peak of $7 billion 781 million in 2016. If growth is maintained, the brand can get closer to the scale of US $10 billion, but in 2017 and 2018, the income was only 7 billion 387 million US dollars and 7 billion 375 million US dollars respectively.

American Eagle Outfitters Inc. (NYSE:AEO), the girl's underwear brand Aerie, and the Internet brand represented by ThirdLove are now circling in the dying giant of VS.

ThirdLove's first entity store opened in New York this week. The brand has long been keen to attack VS and the latter's values and set itself up as the opposite of VS. In early 2017, after restarting the fast fashion brand Hollister underwear business, the Junior Apparel Group Abercrombie Fitch Co. (NYSE:ANF)'s underwear brand Gilly Hicks opened four flash stores this week, which is referred to as the operation of "taking care of your life while you are sick."

More importantly, VS has become an unprofitable brand at the same time of consumer abandonment.

No fashion Chinese network data show that in 2018, L Brands Inc. 3/4 operating profit came from beauty business Bath & Body Works (referred to as BBW), the brand's $1 billion 77 million 500 thousand operating profit accounted for 75% of the group's operating profit of $1 billion 437 million 200 thousand, while VS contributed only 512 million 400 thousand dollars of operating profit, down 45% compared with 2017, and 2015, the peak of VS operating profit reached 1 billion 391 million dollars. In 2018, the operating profit margin of underwear giant in the United States dropped to 6.9%, down 570 basis points.

Under such a low operating profit margin, VS may have actually fallen into deficit last year. This is also the reason why Barington Capital, a radical investor hedge fund, asked L Brands Inc. to split BBW and VS earlier this year, and reorganized the board.

After encountering Barington Capital, L Brands Inc. symbolically restarted the swimwear business and introduced three new members to the board to increase the proportion of female members of the board to 40%. Les Wexner even made a rare internal letter, saying it would assess the annual Victoria's Secret Fashion Show, and believed that the traditional way was no longer suitable for brand promotion.

Unexpectedly, Les Wexner needs to continuously send internal letters this year.

After the outbreak of the Epstein case in early January, the American billionaire released second internal letters, and Epstein Che Cu.

However, the US media and some trading documents show that Les Wexner's so-called cut is a downright lie. In 2007, after Epstein's first incident, Les Wexner family and Epstein still had a lot of transactions.

L Brands Inc., the biggest singer, Jefferies analyst Randal Konik has warned investors many times that VS is not only a product problem, but VS and sub line brand PINK is worse than most peers.

For VS, instead of getting any good news, the brand is moving towards all the bankrupt brands like a vicious circle of consumers abandoning, declining revenues and profits, closing stores and corporate governance problems.

Previously, American Apparel, also known as erotic propaganda, went bankrupt for the two time, while Abercrombie & Fitch Co. completely overturned its famous erotic strategy and finally passed through bankruptcy, but it is still struggling to recover.

Therefore, we have reason to believe that the bankruptcy of the biggest clothing brand in the 21st century may soon happen to VS, because no brand of the same size has such a concentrated crisis at the moment. Author: Tang Xiaotang