This is pretty cool

Victoria’s Secret’s UK arm sunk to a £100m operating loss before it fell into administration, with 200 creditors owed nearly half a billion pounds.

And:

It has 25 shops in the UK.

Plus perhaps 900 staff.

So that’s accumulated losses of perhaps £20 million per shop. That’s almost governmental in its ability to piss it up against the wall.

19 thoughts on “This is pretty cool”

  1. The company makes excessive profits (mark-up around 120-130% net of write-downs on unsold goods so mebbe 200% on stuff sold at full price) on the goods sold buy pays high rents for its shops. Most of the 2018-9 loss was provisions for future rents on unprofitable shops – I guess most of the 2019-2- loss is provisions for future rents on the remaining shops (those that had been profitable prior to lockdown).
    Economics Darwin Award.

  2. VS has a lot in common with government – they’re both about trying to make tits and arses look good.

  3. Doesn’t surprise me. Years ago I used to work in the rag trade, at the manufacturing & distributing end & retailers went bust at around 10% a year, then. Although quite how VS managed it’s a mystery. I set up a little business here flogs what they do, direct to working girls on the Tupperware/Avon party model. So I know how cheap you can source product out of places like China. And how much demand there is.* This is making a good profit & has the potential to go exponential if I could find more chicas with a modicum of work ethic. I can only presume they pissed it away with all those glitzy, high rent shops which are mostly floor space. They’ve been unnecessarily over marketing. If you’ve a good competitive product you don’t need to sell “image”. Stack it high & flog it cheap.

    *A lot of this stuff tends towards “wear once” in the non professional market. It’s the packaging the goods are being presented in. The “consumer” takes off the wrapping & enjoys the contents. Rewrapping for second time around lacks the novelty. So cheap’s more important than durability.

  4. Presumably they had a sizeable online trade too, not just the shops? Though creditors should be even more wary of lending to an online sex toy shop, where the competition is, umm, stiffer.

  5. And, john77, you’re looking at write-downs as if this was the fashion market. It isn’t. If it has “seasons”, it sells into the civilian market better in the winter. For obvious reasons. Getting togged up in this stuff is hot. In the temperature sense. More suited to cooler nights. And, of course, Xmas pressies. Either the goods or the contents. But the lines don’t change overly much. You just budget in for promotional sales & moving lines turn out to be slow sellers. If you’ve “summer” lines you can just box & give them a go next summer.

  6. Bloke in Spain,

    “*A lot of this stuff tends towards “wear once” in the non professional market. It’s the packaging the goods are being presented in. The “consumer” takes off the wrapping & enjoys the contents. Rewrapping for second time around lacks the novelty. So cheap’s more important than durability.”

    I never quite got their market. Women wear 2 types of lingerie: practical and boudoir. It didn’t compete with the practical companies like M&S on price and quality, and it isn’t as racy as the likes of Ann Summers (who also, it has to be said, improved the quality from when they were sold through parties).

    On top of that, the internet has flooded the market with retailers in the “boudoir” sector. It really suits mail order, particularly as men buying it as gifts are more comfortable with that.

  7. BiS ‘They’ve been unnecessarily over marketing. If you’ve a good competitive product you don’t need to sell “image”. ‘

    But isn’t there a difference between the market for ‘workware’ and the marketing of Veblen goods?

  8. So Much For Subtlety

    Years ago I used to work in the rag trade, at the manufacturing & distributing end & retailers went bust at around 10% a year, then.

    Don’t ever get involved in an industry with low entry costs, skills that huge numbers of girls learn in childhood and relating to something thousands of them retain a strong interest in for life.

    See also restaurants.

    I guess putting fat transsexuals in their fashion parade did not work. Who would have guessed that would not work out for a company whose business model fundamentally involves giving men an erection?

  9. BIS,

    BTW sounds like a good little business. Bit of MLM and also online. Agent Provocateur for the Primark end of the market. If you want any help, I think you have my email.

  10. @SMFS Don’t ever get involved in an industry with low entry costs, skills that huge numbers of girls learn in childhood and relating to something thousands of them retain a strong interest in for life.

    You say that but ever noticed how all women’s clothes either cater for one of:
    1. Tall gangly girls with boy’s bodies (models)
    2. Clinically obese (a more recent phenomenon with all the body positivity bollocks)
    3. Grannies

    Whenever I have had to visit clothes shops with my significant other I am astounded yet again by how nothing fits her and it’s not like she’s got a unique body shape. I reckon the gays and women who run the fashion industry have left 80-90% of the female fashion market completely unaddressed.

  11. So Much For Subtlety

    Mal Reynolds August 17, 2020 at 12:33 pm – “I reckon the gays and women who run the fashion industry have left 80-90% of the female fashion market completely unaddressed.”

    So there is room for the Fox News of the fashion world? I always assumed that this is what M&S catered to.

  12. @ bis
    I should not have thought that your business was very comparable to a retail shop in a UK High Street.
    VS have a relatively low wage bill as a %age of sales so they don’t need a 100% mark-up to make a decent return on capital or on sales. But they have got stupidly expensive leases amounting to a liability of over £300million – that’s £12million pounds average future rent per store: £873k per store per year for, on average, 14 years from Feb 19 – in addition to which they spent £67 million on “leasehold improvements” that have to be written off at/by the end of the lease and they are spending another £17 million a year on “operating leases” of property and/or equipment.
    Their annual bill for property and equipment (before the exceptional charge for onerous leases) is approaching twice the amount they spend on buying the garments they sell. Is that sensible?

  13. I think that’s roughly what I was saying. I know it’s a business you can make money out of, because I am making money. I could make much more money. The pinch point is latinas are basically bone idle. If there’s a way of incentivising them doesn’t involve cattle prods, I haven’t found it. I’d say VS got carried away with their own image & forgot what they were actually supposed to be doing. Hence the barking lease situation. But British businesses aren’t exactly strangers to this sort of lunacy.

  14. Good riddance to septic invaders who thought they knew UK sex market. We’ve had similar US fails

    Ann Summers has UK penetration sewn up

  15. @bis

    The pinch point is latinas are basically bone idle. If there’s a way of incentivising them doesn’t involve cattle prods

    Speed, coke, mdma, Red Bull? Might shorten useful to you working life, but large supply of new – cost/benefit

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