L Brands, the parent of Victoria’s Secret, now considers China its most important global market.
Executives said this week they expect that in as few as five years China, Western Europe and the Middle East will each account for US$1 billion in annual sales. That would put the Victoria’s Secret China operation on a par with the North American business.
China is “our most important market,” Martin Waters, president of L Brands International, said.
“Maybe someday we’ll have the fashion show in Shanghai – maybe – because we’re a global brand,” added Leslie Wexner, L Brands’ founder, chairman and CEO. “We have demonstrated that we have the best brand-building ability in the world. People who can’t read English, when they see the Victoria’s Secret name, they smile.”
As many as 350 million Chinese are expected to watch the upcoming Victoria’s Secret Fashion Show, a sure sign of the brand’s growing appeal there.
Wexner and Waters were commenting at an investors presentation after the company warned its October same-store sales would fall by up to 2 per cent. The company’s stock price slipped 7.9 per cent as a result.
But the executives were upbeat about the company’s prospects, comparing the poor quarter to a football match loss.
“Like Urban Meyer, I’m not happy about getting beaten in any quarter or any game,” Wexner said. “Not having the best-in-world profit margin is, for us, a catastrophe in the same way losing one game in a season is a catastrophe for Urban Meyer.”
During the last 12 months, L Brands has moved away from franchise model in China in favour of company-owned stores, which works well for it in the US.
Wexner says his company has focused on a slow, careful expansion in China rather than rush in as some foreign brands had done, to their regret.
“We’ve been a patient second or slow third… because we thought we would learn more,” Wexner said. “We always asked ourselves: Are you really building a sustainable international business?”