Over the last couple of years, Victoria’s Secret has emphasized the changes it has made in its marketing, which for a long time was stuck in its outmoded “angels” approach. That allowed DTC upstarts including Adore Me, Lively and ThirdLove, and American Eagle’s Aerie brand, to take away attention and market share.
In addition to doing its own work, which has included partnering with smaller brands and launching a DTC label of its own, the company is now fighting back by buying some of its competition. Prior to the Adore Me acquisition, Victoria’s Secret also purchased a minority stake in Frankies Bikinis and invested in For Love & Lemons.
“This acquisition will be a significant accelerant as we pivot toward growth and modernize the foundation of our company with an entrepreneurial mindset that puts technology at the forefront of everything we do,” Victoria’s Secret & Co. CEO Martin Waters said in a statement. “In partnering with the incredible team at Adore Me, we will move to the future much faster.”
The tie-up makes sense for both companies, according to Jane Hali & Associates analyst Jessica Ramírez. As with many DTC brands, profitability remains a question mark, but that has the potential for getting fixed under a large umbrella like Victoria’s Secret, she said by phone.
“Some of these DTC brands in general, not just intimates, have done a lot of learning and by now they’re in a pretty mature state. So I think when they do get acquired or when bigger companies invest in them, there is a lot of learnings that they can bring into the bigger business,” she said. “Adore Me has been around for a bit now, and it’s been a pretty good name within the intimates brands that have come up recently.”
This acquisition will help Victoria’s Secret with a turnaround that is taking longer than it may have anticipated, according to GlobalData Managing Director Neil Saunders, who called it “a sensible deal” because it will bring Victoria’s Secret new customers and technology.
“Having lost an extensive amount of market and customer share over the past decade, Victoria’s Secret is now trying to claw it back,” he said in emailed comments. “Part of this is being done through a reinvention of the core brand, with a focus on making it more inclusive. However, in a market where demand is tightening and where competition is intense, this strategy is taking time to deliver.”
For optimal success, though, the two brands should maintain some distance, he also said, noting that much of the competition remains better in tune with today’s consumer trends. And Victoria’s Secret won’t be able to simply acquire its way through its rehabilitation.
“Victoria’s Secret has made strides in reinventing itself, but it remains somewhat tarnished by its history and its directional positioning,” he said. “Adore Me has a very different vibe and it is important the goodwill it has built with its customers is not corrupted by a larger entity. To be fair, we believe Victoria’s Secret understands this because of its focus on developing its own sub-brands like Happy Nation. … However, rivals like Aerie are still out ahead in terms of growth and alignment with current culture, and that necessitates a lot more internal work and rethinking from Victoria’s Secret.”
