Victoria’s Secret may be the first name in women’s lingerie, but with the emerging bralette trend, American Eagle Outfitters Inc.’s Aerie brand is gaining ground.
Lingerie drawers are getting a makeover with more women pushing aside their padded, push-up bras in favor of bralettes, an unlined undergarment that has gained in popularity with millennials and stylish women who are fond of more sheer fashions.
L Brands Inc. LB, +5.14% parent company to Victoria’s Secret, said bralettes along with sports bras are a dual trend it is seeing in its core lingerie business.
“One of the important things about the bralette business, or unconstructed bra business particularly, is we do think it has a higher fashion element to it, and we think that’s a good thing for us,” said Stuart Burgdoerfer, chief financial officer of L Brands, on the company’s Thursday earnings call, according to a FactSet transcript. “We’ve been a fashion specialty retailer for a long time.”
Victoria’s Secret is in the process of exiting the swim and apparel categories, while also making changes to its promotions and discontinuing its iconic catalog.
The brand “drove very significant growth” in bralettes and sports bras in the second quarter, Burgdoerfer said.
Bralettes have become popular with a young customer, which Burgdoerfer said the company views “very positively.”
Moreover, it’s an undergarment with a lower price point. Many bralettes on the Victoria’s Secret website are priced at $20. However, the new “Very Sexy” push-up bra is priced at $59.50.
“There’s a lot of price value,” said Marlene Marchewka, founder of Façon Consulting, a brand and retail consultancy, during a recent Cowen & Company video interview with retail analyst Oliver Chen.
While the brand has cornered the market on sexy, with bra styles that include the “Very Sexy” and the “Bombshell” and a televised runway show that features some of the most famous models in the world in barely-there costumes, the bralette category is wide open.
Urban Outfitters Inc. URBN, +2.00% said on its earnings call on Tuesday that intimates are one of its key “emerging categories.” Many of the items in the women’s intimates section of its website are bralettes and unlined bras.
And American Outfitters’ AEO, +2.13% Aerie brand, which reported a same-store sales increase of 24% on Wednesday, was “onto the bralette trend fairly early,” said Jennifer Foyle, Aerie global brand president, on the earnings call, according to a FactSet transcript.
American Eagle said it will be launching a new sport and yoga line in the fall.
Experts believe that Victoria’s Secret is not only aggressively pursuing the bralette customer, they’re also chasing American Eagle.
“This is something that Aerie can own and is core to them,” said Marchewka. “VS was definitely later to the bralette party. Aerie has always been a brand that stood for natural and did unlined/lightly-lined styles whereas VS has always been best at push-up.”
owen & Co. rates American Eagle stock outperform with a $21 price target, and rates L Brands outperform with a $78 price target.
L Brands shares are up 5.1% in Thursday trading, but down 18.8% for the year to date. American Eagle shares are up 1.9% on Thursday, and up 20.6% for 2016 so far. And Urban Outfitters shares are up 2.2% in Thursday trading, but up 62% for the year so far.
The S&P 500 index SPX, +0.22% is up 6.8% for the year to date.
Source : marketwatch
