Will Weimi, The World'S First Underwear Brand, Go Bankrupt?

It's time, it's time for us to expect that Victoria's secret, the world's No. 1 underwear giant, has gone bankrupt.

The sexy trend of VS, which has been popular for many years, was encircled and suppressed by the world under the "metoo" trend from Hollywood in 2017. Vs, which relies on Carnival style underwear show for global live broadcasting, has been accused of materializing feminism and male chauvinism in the past three years, but it has been declining steadily. The same store sales have continued to plummet. It has started a large-scale store closing mode, and is ready to end the annual underwear show. The last straw that overcame its brand value fell this month.

The relationship between evsre, Inc. and Jeffrey, Inc. was announced on July 25. However, the underwear and beauty giant claimed that Epstein had been the private financial manager of Les Wexner, the company's major shareholder, chairman and CEO, but the two had ended their cooperation 12 years ago and believed that Epstein had never been employed by the company or acting as an authorized representative of the company.

On July 6, Epstein was arrested on suspicion of sexual assault and organizing underage girls to engage in sex trade. A large number of famous political and business people in the United States were involved, including the current president trump. Les Wexner, the boss of VS, was the most closely related person with whom he said in an interview that "he will always be the most loyal friend."

After all, Paul Marciano, the boss of guess Inc. (NYSE: GES), announced his resignation after being accused of sexual harassment. However, he reversed his mind and not only fired the CEO, but also continued to stay in the company; Later, Liu qiangdong, founder of jd.com Inc. (NASDAQ: JD), was involved in a sexual assault case in the United States, but the board of directors of jd.com has remained indifferent.

However, consumers who are increasingly opposed to vs may eventually let Les Wexner and the companies it controls make a passive choice. After all, the requirements and standards of moral and political correctness of American elites are much higher than those of China's "elite" society which speaks with money.

At the same time, Les Wexner and l brands Inc. controlled by LES Wexner have gone far beyond that. Since Wednesday, nearly 20 U.S. law firms, including Robbins Geller Rudman & Dowd LLP, Kahn Swick & Foti, LLC and the Schall law firm, have launched an investigation into L brands Inc. to sue the underwear and beauty giant for false and misleading statements. Since l brands Inc. announced the dividend cut by half when it announced the third quarter financial report of fiscal year 2018 on November 19, 2018, and the company's management had promised not to cut the dividend. The news of the dividend cut caused the share price of L brands Inc. to plummet by 18% on the same day, causing losses to investors who believe l brands Inc. does not cut dividends from May 31, 2018 to November 19, 2018.

In fact, investors who started investing in L brands Inc. only in 2018 are lucky. Since the announcement of withdrawing from swimsuit restructuring core business in early 2016, l brands Inc. shares have plummeted by three-quarters. The main reason is that the traditional underwear represented by vs and the propaganda strategy of traditional underwear are totally invalid.

Since mid-2016, every time l brands Inc. releases its monthly data, its share price has fluctuated violently, of course, falling more than rising. Until the beginning of this year, l brands Inc. secretly stopped the disclosure of monthly data. Since February 2019, the company has not disclosed monthly data.

The total sales of vs reached the peak of US $7.781 billion in 2016. If the growth trend was maintained, the brand could have been closer to the scale of US $10 billion, but the revenue in 2017 and 2018 was only US $7.387 billion and US $7.375 billion respectively.

American Eagle Outfitters Inc. (NYSE: AEO) girls' underwear brand Aerie, as well as the Internet brand represented by thirdlove, are hovering around vs, the dying giant elephant.

The first physical store of thirdlove opened in New York this week, and the brand has long been keen to attack vs and its values, and set itself up as the antithesis of vs; in early 2017, after the fast fashion brand Hollister underwear business was restarted, gilly Hicks, the underwear brand of Abercrombie & Fitch Co. (NYSE: ANF), opened four flash stores this week, which was referred to as vs "Take advantage of your illness" operation.

More importantly, vs has become a unprofitable brand in the face of consumer abandonment.

In 2018, three quarters of the operating profit of L brands Inc. came from Bath & Body Works (bbw), which accounted for 75.0% of the group's $1437.2 billion in operating profit, while vs contributed only US $5124 million, a sharp drop of 45% compared with 2017. In 2015, the operating profit of L brands Inc. came from Bath & Body Works (bbw) Operating profit peaked at $1.391 billion. In 2018, the U.S. underwear giant's operating profit margin was as low as 6.9%, down 570 basis points year on year.

Under such a low operating profit margin, vs may have actually fallen into a loss state last year. This is also the reason why barington capital, an aggressive investor hedge fund, asked l brands Inc. to split BBW and vs and restructure its board of directors earlier this year.

After being forced by barington capital, l brands Inc. symbolically restarted its swimsuit business and introduced three new members to the board of directors, raising the proportion of female members on the board to 40%. Les Wexner even rarely sent an internal letter in person, saying that he would evaluate the Victoria's Secret fashion show once a year, and thought that the traditional way was no longer suitable for brand promotion.

Unexpectedly, Les Wexner will need to send internal letters continuously this year.

At the beginning of the month, the second Epstein letter broke out in the United States.

However, the US media and some transaction documents show that LES Wexner's so-called cutting is a complete lie. After Epstein's first case in 2007, there are still a lot of deals between the LES Wexner family and Epstein.

Randal Konik, Jefferies analyst, the biggest empty talker of L brands Inc., has repeatedly warned investors that the problem of VS is not just a product problem. Vs and pink, a young and affordable brand on the sideline, "realizes" worse than most of its peers. The brand is currently in the structural downward channel.

For vs, not only can't get any good news, on the contrary, the brand is going into a vicious circle of being abandoned by consumers, declining revenue and profits, closing stores and corporate governance problems, just like all bankrupt brands.

Before that, American Apparel, also known for its erotic propaganda, went bankrupt twice, while Abercrombie & Fitch Co. completely overturned its famous erotic strategy and finally passed the bankruptcy. However, it is still struggling to recover.

Therefore, we have reason to believe that the biggest clothing brand bankruptcy in this century may happen to VS, because no brand of the same size has such a centralized crisis at present.