// Victoria’s Secret warns on British pound devaluation
// The lingerie retailer’s priority is to break even in the UK market
// Victoria’s Secret has 26 stores in the UK & Ireland
Victoria’s Secret is the latest retailer to have warned on the drop in value of the British pound.
The US-based lingerie retailer said the pound devaluation posed a challenge to the “fundamental economics” of importing merchandise into the UK.
Parent company L Brands’ international boss Martin Waters said a relatively weak economy was undermining efforts to revive Victoria Secret’s loss-making business in the UK.
In 2016, Waters said business in the UK was “nicely profitable and positioned for growth”.
However, Victoria’s Secret’s priority now is to break even.
“That doesn’t sound like any great shakes, but with the UK being in the position that it is, we don’t think it’s safe to be investing heavily,” Waters said.
He added: “We’ve seen significant foreign exchange pressure that has impacted the business, and actually challenges the fundamental economics of importing American merchandise into the UK.”
As well as the exchange rate issue, Victoria’s Secret is dealing with pressure on its underlying business in the UK similar to what is it facing in the US.
The brand currently has 26 stores in the UK and Ireland compared with more than 1000 in the US.
Waters said the group was depending on digital sales as part of its UK turnaround plan, as well as less discounting.
L Brands‘ market capitalisation has fallen by $24 billion (£19.30 billion) since 2015.
Like-for-like sales at Victoria’s Secret fell six per cent in the quarter that ended August.