The UK arm of Victoria’s Secret has filed for bankruptcy amid the socio-economic impact of coronavirus disease (COVID-19).
The lingerie brand has collapsed into administration, with accountancy firm Deloitte being appointed to renegotiate lease terms as well as sell the loss-making division in order to save the business owner L Brands LB.
According to Deloitte, the company had become a victim of the lockdown rules, which saw consumers spending less on nonessential items like fashion and luxury.
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The firm’s administrator Rob Harding said in a statement that the pandemic further heighten pressure on Victoria’s Secret to keep up with online competition.
“The effect of the lockdowns, combined with broader challenges facing bricks-and-mortar retailers, has resulted in a funding requirement for this business, resulting in today’s administration,” said Deloitte administrator Rob Harding in a statement.
L Brands has seen been seeing a decline in profit since 2016, with its 2019 sales reporting net losses of $366 million. Many believe this is because customers have lost interest due to the Victoria’s Secret’s issues regarding inclusivity, while others believe the brand is having difficulty competing with online retailers. However, COVID-19, Harding said, accelerated the fall of the UK arm.
The company’s interim chief executive Stuart Burgdoerfer said that they are exploring ways to address the operating losses in its stores.
“We are taking a number of actions across Victoria’s Secret and Victoria’s Secret PINK to strengthen and position the business to succeed as a separate stand-alone company. As part of that profit-improvement plan, we are addressing the operating losses in our 25 U.K. stores,” he said.
He added that the brand’s stores elsewhere won’t be affected by the bankruptcy, and that the online sales in the UK arm will continue.
