On Thursday, Victoria’s Secret & Co. delivered stronger-than-expected results for the second quarter. The company reported net sales of $1.42 billion, a 1% decrease from the same period last year but at the favorable end of its guidance range.
At the time of the earnings announcement, Victoria’s Secret was preparing for the return of its Victoria’s Secret Fashion Show, taking place on October 15 in New York City. After a four-year hiatus, the show promises to bring back the glamour and excitement that made it a cultural phenomenon, but with a modern twist.
On Wednesday, Victoria’s Secret announced on Instagram and TikTok that Tyra Banks will return to the show, although it is unclear whether she will walk the runway. On TikTok, the video — which features Banks and also Gigi Haded, who is scheduled to walk in the show — has already amassed 2.7 million views.
The confirmed lineup for the show includes a mix of iconic “Angels” and new faces, including Candice Swanepoel, Devyn Garcia, Grace Elizabeth, Imaan Hammam, Mayowa Nicholas, Paloma Elsesser and Taylor Hill, all of which have been announced by the brand through social posts over the last couple of months. At its peak, in 2001, the Victoria’s Secret Fashion Show drew in approximately 12 million viewers, according to the WSJ.
However, the return of the show is not without controversy. The annual show was originally canceled in 2019 amid growing criticism of its lack of diversity and inclusivity, as well as declining ratings and backlash over comments made by former executives. The brand has since been under pressure to modernize and evolve to better reflect the values of today’s consumers while also keeping some of its more loved features like the fashion show and the wings, said Timothy Johnson, VS&Co’s chief financial and administrative officer. In January 2023, the company acquired the direct-to-consumer lingerie brand Adore Me for $400 million, expanding its digital capabilities and inclusive product offerings.
Of course, the show is not just about entertainment; it’s also a key commercial opportunity for the brand. “We’re excited to see not just positive sentiment but also new customer interest that we can generate from the fashion show, which will be commercialized this year,” said Johnson. “This will hopefully drive positive results from a sales perspective and kick off the holiday season for us in a major way.”
The show comes amid executive changes at the company. Hillary Super, the former CEO of Rihanna’s Savage X Fenty, will step in as CEO on September 9. Her compensation package reportedly includes a base salary of up to $1.2 million, a $1 million sign-on bonus and an annual cash bonus of up to $2.4 million, with a substantial portion tied to equity.
As for VS&Co’s other brands, Pink’s “Pink Friday” back-to-campus event in late July drove significant customer engagement and sales both in stores and online, Johnson said. In addition, during the second quarter, Pink boosted foot traffic among 18-22-year-old consumers, including by offering backpacks as a promotional item.
Johnson revealed that VS&Co.’s loyalty program, active for just over a year, now includes 32 million members who generate about 80% of weekly sales. “Customers inside our loyalty program are shopping more year-over-year and spending more year-over-year. That’s a really good sign for us, in terms of product acceptance and how we’re reaching them,” he said.
Victoria’s Secret’s gen AI investment
Over the past year, Victoria’s Secret has changed its email marketing strategy by integrating software marketing company Movable Ink’s Da Vinci, an AI-native personalization solution, to create more customer-centric campaigns. “Harnessing connected data and providing an ongoing feedback loop for continuous optimization puts the customer at the center to deliver a higher level of relevance within content and send time,” said Lindsay Massey, vp of marketing at Victoria’s Secret ahead of the earnings call.
This approach has allowed Victoria’s Secret to move from producing a single version of an email campaign to generating hundreds of thousands of personalized versions with significantly less setup time. “We know customers have different shopping behaviors — some may be more likely to shop in the morning, others later in the evening. We’ve seen firsthand that tailoring each email with the right message and at the right time is resonating,” Massey said.
As a result, the brand has seen double-digit lifts in click-through rates, conversion rates and revenue per spend. “We have seen positive results in several key areas: improvement across key email metrics as compared to the control group, as well as time savings and operational efficiency gains,” said Massey.
Victoria’s Secret continues to push the boundaries of AI-powered personalization, with plans to further optimize customer experiences. “Now that we are 1:1 personalizing the content and send time within our emails, we are excited about moving into AI-powered frequency personalization for each customer in the future,” Massey said. This next step aims to ensure each customer receives the most relevant messages at the optimal times and frequencies.
