2019-08-05_Bloomberg_Businessweek-Europe_Edition

(Nandana) #1
◼ BUSINESS Bloomberg Businessweek August 5, 2019

16


● ByacquiringAvon,Brazil’sNaturaplanstoturn
itsarmyofdirectsalespeopleintoonlineinfluencers

Sellingthe Rainforest


Door-to-Door


THEBOTTOMLINE Victoria’sSecretlongprosperedby
promotingitssexylingerie.Butchangingnormsaboutwomen
andbeautycouldputthatgrowthatrisk.

may be a result of the 2016 departure of Victoria’s
Secret’s longtime CEO, Sharen Jester Turney,who’d
guided the brand for a decade while managingto
convince many consumers that its celebrationof
the feminine body was a form of femaleempow-
erment. Turney left because she didn’t agreewith
the direction Wexner wanted to take the business,
according to a person familiar with theirconver-
sations. “With her gone, the men really justtook
over,” says one former executive. “And thesewere
men who had one ideal of women, andit’snot
based in reality.”
Jan Singer, who replaced Turney, left lastyear
soon after Razek made comments some plus-size
modelsandthetransgendercommunityfound
demeaning.Singerwasreplacedbya man,leaving
L Brandswithonlytwowomenamongthe 10 listed
executiveofficersandbrandleaders.Attheurgingof
activistinvestorBaringtonCapitalGroup,LBrands
this spring added two more women to its board.
The failure to embrace changing normsabout
womenandbeautymayalreadybehavingan
impactonVictoria’sSecret’sresults.Afterrising
steadilysince2010,salesfellto$7.4billioninfis-
cal 2017—the first drop in seven years—andedged
slightly lower again last year. Sales at storesopen
formorethan 12 months,a closelywatchedmet-
ricinretailing,alsoslippedin2018,withoperating
incomeattheunittumbling45%,to$512.4million.
Those poor results have led L Brands totighten
its purse strings, resulting in the shutteringof
dozens of underperforming locations. LBrands
announced in February plans to close about 53
Victoria’s Secrets in North America this year,more
than three times the 15 it’s historically closedinan
averageyear.“Giventhedeclineinperformanceat
Victoria’sSecret,wehavesubstantiallypulledback
oncapitalinvestmentinthatbusiness,”LBrands
executives said in prepared commentaryinMay
after reporting a further 5% drop in same-store
sales in 2019’s first quarter.
Another notablechange:InMay,Victoria’s
Secretpulleditsfashionshowfromnetworktele-
visionafter 23 years.Ratingsbottomedoutin2018,
withonly3.3millionviewers,downfromthepre-
viousall-timelowof 5 million the year prior.The
annual show is expected to move to streaming.
There may be limits to just how much Victoria’s
Secret can change its messaging. AmericanEagle
Outfitters Inc.’s rival Aerie line has found abaseof
passionatecustomerswhoareyoungerandmore
diverseandarecallingforbrandstohavebody-
inclusive messages. That’s helped Aerie log 18 con-
secutive quarters of double-digit same-storesales.
One advantage is that Aerie doesn’t have 40 years

ofbranding toovercome.“There’sbeen very
interestinggrowthinconsumersembracingthis
moreholisticbody-image view, but it’s probably too
far of a step away from what the DNA of Victoria’s
Secret is,” says Alex Arnold, a managing direc-
toroftheconsumerpracticeatinvestmentbank
OdeonCapitalGroupLLC.“Itwouldbea whole-
salerepositioningofthecompany.”�KimBhasin,
JordynHolman,SophieAlexander,andAndersMelin

On a pleasant Tuesday in May, dozens of beauty
influencers gathered at the New York Botanical
Garden in the Bronx for a vegan lunch and a panel
on sustainability in cosmetics. As they sipped pas-
sion fruit caipirinhas, the young women snapped
photos of lotions and soaps featuring exotic ingre-
dients such as murumuru and priprioca.
They’re the types of products that made host
Natura Cosmeticos SA a beauty giant in Brazil—
and that the 50-year-old company wants to bring
to the rest of the world. With its agreement in May
to buy Avon Products Inc., Natura is accelerating its
global ambitions and betting its brand of natural,
ethically sourced cosmetics will appeal to millen-
nial and Generation Z consumers who increasingly
want sustainable goods.
The company wants to attract social media
enthusiasts such as Ava Lee, a New Yorker who was
at the Bronx event. “I love that all Natura Brasil
products are clean and sustainable,” says Lee—
@glowwithava on Instagram—who often posts pho-
tos of cosmetics for her almost 24,000 followers.
“It’s hard to come by products that smell this good
and at the same time are very gentle on the skin
and don’t cause irritations.”
Natura’s $2 billion purchase of Avon—the very
companyit hadlongemulatedwithitsdoor-to-
doordirect-sellingmodel—willmakeit theworld’s
fourth-biggest cosmetics company and among the
largest focused on natural products. About 80%

“In other
markets,
you see the
movement of
beauty going
into wellness.
In Brazil it
started the
other way
around”
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