THE CHEAT SHEET

Does Victoria's Secret's Owner Have a Plan B?

Bath & Body Works | Source: Shutterstock

• Victoria's Secret and Bath & Body Works owner L Brands reports financial results on May 21
• This will be the first time executives speak publicly since a plan to sell the ailing lingerie brand to Sycamore Partners fell through
• L Brands founder Les Wexner has exited Victoria's Secret as originally planned, and the parent company still wants to separate its two brands

Early Returns From America's Reopening

Inside a mall in Atlanta, Georgia | Source: Shutterstock

• Most US states have allowed at least some stores to reopen in the last two weeks
• Though a few stores have seen crowds, foot traffic has been slow to return overall. Clothing stores' sales fell nearly 80 percent in April
• J.C. Penney filed for bankruptcy on Friday; Gap will hold a virtual shareholders meeting on May 19

Health concerns are surely keeping some shoppers at home. But the pandemic is changing retail in other ways that could reduce brick-and-mortar foot traffic for the long term. Many consumers have undoubtedly gotten used to shopping online. And a Piper Jaffray analyst compared visiting a newly reopened luxury department store in Houston as "jarring" and "more akin to shopping in a warehouse." 

The Bottom Line: Scenes of crowded stores and lines snaking through malls also mask the turmoil happening behind the scenes, including rent disputes, major mall tenants in financial peril and the prospect that tens of thousands of stores may never reopen.

China's Halting Recovery

Cai Xukun Stars in Prada 520 Campaign | Source: Courtesy

• China's 520 holiday is the first major marketing opportunity since the pandemic
• Some luxury brands, including Chanel and Louis Vuitton, are raising prices, prompting huge crowds at stores
• Chinese consumer spending has been slow to recover, raising fears of a double-dip economic downturn

China's retail rebound has been uncomfortably slow. There's even talk of a "W" shaped recovery, where the economic momentum sparked by stores and factories reopening falters as consumers fail to turn up. The marketing around the May 20 holiday (the date sounds like "I love you" in Mandarin) reflects the uncertainty of the times. Prada, Louis Vuitton and others are rolling out their 520 campaigns, the first major marketing opportunity in months, since Covid-19 crushed spending around Chinese New Year and Valentine's Day. The campaigns mainly centre around relatively affordable items and more muted styles that sell well in a weak economy. And though some luxury brands can count on lines around the block outside their boutiques, they are putting new emphasis on digital marketing as well, including livestreams featuring top influencers.

The Bottom Line: Another trend emerging out of China is the bifurcated nature of recovery. Luxury brands appear confident of a quick rebound, while the rest of the fashion industry is bracing for a long, slow return.

SUNDAY READING

Professional Exclusives You May Have Missed: 

• Designers lobby to "fix" the fashion system. Will it work?
• Luxury's livestreaming gamble.
• The problem with the online luxury model.
• Should all fashion brands be selling masks?
• How to make a magazine under lockdown.
• What makes a luxury turnaround work?
• With lockdowns eased, Paris reopens for work.
• What the bankruptcy onslaught means for the future of retail.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com. 

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