Victoria's Secret is reportedly leaving the swimwear business, with a source telling BuzzFeed the brand will be "exiting out of all current inventory by the end of this year."
While the company hasn't offered an official public statement confirming the change, it issued a press release earlier this month that suggests the rumors are true. Specifically, parent company L Brands (LB - Get Report) said it was restructuring the organization into three core business units -- Victoria's Secret Lingerie, PINK and Victoria's Secret Beauty. The release also noted that the company is "focusing resources on core merchandise categories, where the company believes the greatest growth potential exists," which will "involve the elimination of certain merchandise categories."
While fans of the line might be upset by the news, this is a smart move. Swimwear hasn't been accounting for a significant portion of the brand's sales. This comes amidst heightened competition, including many online only companies. Victoria's Secret saw overall sales rise and might have pressed on. But it has succeeded in the past in refocusing on core businesses.
According to a BuzzFeed reported, swimwear contributed roughly $500 million --- only about 6.5% - in sales. Moreover, the company reported a decline in swimwear sales in August. It attributed the drop to "the decision to chase a fashion trend and roll out a swimsuit line that featured complicated, lacy elements."
It's logical that the company would cut items that aren't selling well to make more room in stores for those that are likely to do so. This is to avoid markdowns on excess inventory.
In addition, the swimwear market is becoming saturated. Victoria's Secret is likely to face more competition in the future. That's especially true when it comes to e-commerce. There are several swimwear brands that sell exclusively online, like Triangl and Solid & Striped. Swimwear lends itself well to digital marketing.
J. Christopher Burch, an investor in both Solid & Striped and Chubbies, a line of men's swim trunks, recently told Women's Wear Daily, that swimwear plays well in content-rich digital environments like Instagram and is often featured in travel and vacation photos. These images tend to resonate with consumers.
Consumers shopping online don't have the option to try on the suit in a store. So they might be more likely to convert on the spot.
New brands like Cocodune have made buying swimwear online more appealing by allowing shoppers to try on four items over the course of five days for free. Shoppers simply return the items they don't want and are only charged for what they keep. Returns are always free.
According to a recent Onestop Internet survey, 70% of consumers said free returns are the most critical factor in deciding whether buy online. Furthermore, 65% of consumers said they would be willing to accept a shorter return period if it meant they could order multiple sizes of an item while only being charged for one unit. As such, Cocodune's strategy will likely appeal to shoppers and help the young brand shine in the saturated swimwear space.
Could Victoria's Secret swimwear have rebounded this year by simplifying designs and shifting back toward the suits that sold well in past years? Yes. However, when you have three other divisions of a brand that are significantly outselling another combined with increased market competition, abandoning swimwear seems like a wise move. Analysts at Stifel told Fortune that L Brands has "made trims where the company was bloated -- leaving behind a strong core product offering that has in past years, driven growth."
That seems likely to occur again.