The famous brown-and-white striped shopping bags of luxury retailer Henri Bendel will soon be history as parent company L Brands is set to shut all of Henri Bendel’s 23 stores—including its Fifth Avenue flagship in New York City—come January. But don’t blame the troubles just on its larger sister chain Victoria’s Secret.
In a statement late Thursday, L Brands chairman and CEO Les Wexner said he’s shutting down the Bendel stores and online operations because the company, which also owns Bath & Body Works, wants to improve profitability and focus on its “larger brands that have greater growth potential.”
Yes, Victoria’s Secret, with nearly 1,200 stores and the company’s largest unit, has seen profit and sales declining as even demand for its once-hip and younger label Pink has faltered. But Henri Bendel itself has been losing money: L Brands estimates that Henri Bendel’s 2018 sales and operating loss, excluding closing costs, will total $85 million and $45 million, respectively.
While that business is small compared to the $12.6 billion in sales L Brands generated last year, the loss was outsized in comparison. L Brands’ “other” segment, which includes Henri Bendel and the company’s acquired Canadian lingerie chain La Senza, has posted year-to-date operating loss of $93 million, which is—at minimum—the third year it’s not made money. That was about half of Victoria’s Secret’s operating profit of $197 million—after a 42% slump—during the same period.
Bath & Body Works, with about 1,700 stores, was the only bright spot, with operating income rising 13% to $292 million.
Henri Bendel’s losses and closings also reflected challenges facing the brick-and-mortar luxury space as it struggles to compete against an increased shift to online purchases on marketplaces like Farfetch, which recently filed its IPO plan. The sector also is competing against changing consumer preferences to pare back on fashion to spend more on things like the latest iPhone and other gadgets.
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