Businessmodel of L Brands

Customer Segments

Through its core Victoria’s Secret, PINK, and Bath and Body Works brands, L Brands provides a range of specialty apparel and personal care products to female consumers.

The Company’s premium brands are typically marketed to middle class consumers, often younger professionals who have disposable income and an interest in design. The Company’s Victoria’s Secret brand is also marketed to men seeking gifts for their partners, with the Company reportedly designing its retail experience to make men feel comfortable while shopping for lingerie.

L Brands also offers its PINK-branded range, which is targeted at college-aged women, with its prints and designs appealing to a more casual market than the traditional Victoria’s Secret line. Reports suggest that the Company is also seeking to market this brand to younger consumers, including teenagers and middle school-aged girls.

The US is L Brands’s key market, accounting for the majority of its sales. The Company also serves customers across Europe, Asia Pacific, the Middle East, and Latin America.

Value Propositions

L Brands provides value to its customers in the following ways:

• The quality of its products, with the Company providing a broad portfolio of premium apparel and personal care products, using unique and innovative designs and processes, as well as high-quality materials and ingredients to set its products apart from competitors;
• Its industry-leading brands, with the Company controlling high-profile, market-leading brands such as Victoria’s Secret, Bath and Body Works, and PINK, which are associated with quality and carry with them a level of prestige;
• Its international reach, with the company operating retail chains across Europe, Asia Pacific, the Middle East, and Latin America, as well as serving an extensive domestic customer base in the US;
• Its customer service, with the Company offering an enjoyable retail experience, its stores utilising signature visual presentation techniques, in-store marketing, and music to attract customers, as well as employing dedicated sales associates to reinforce the image represented by its brands; and
• Its accessible retail model, with the Company operating a multichannel sales model, enabling customers to purchase products online as well as through the Company’s physical chain of retail stores. ### Channels

L Brands operates a website at www.lb.com, through which it provides information on its activities, brand portfolio, and performance. The Company operates separate websites for its core Victoria’s Secret and Bath and Body Works brands, at www.victoriassecret.com and www.bathandbodyworks.com, as well as for its La Senza and Henri Bendel brands. These brand-specific websites double as online sales channels, with customers able to browse the Company’s products, place orders, and arrange deliveries. The Company’s PINK brand is sold via the Victoria’s Secret store.

L Brands additionally operates several chains of physical retail outlets, through which it sells products via in-house sales personnel. This includes more than 1,100 Victoria’s Secret stores in the US, Canada, and the UK, as well as more than 390 stores and various small-format locations in more than 75 other countries operating under franchise, license and wholesale arrangements; more than 1,600 Bath and Body Works stores in the US and Canada, as well as 125 stores in 30 other countries; more than 120 La Senza stores in Canada, as well as more than 220 stores in 29 other countries; and a Henri Bendel flagship store in New York, as well as 28 other stores.

L Brands additionally operates its own distribution infrastructure, including a network of distribution centres and shipping facilities.

Customer Relationships

L Brands offers products to its customers on a largely self-service basis, with its Victoria’s Secret, Bath and Body Works, La Senza, and Henri Bendel brands selling products through dedicated online stores. These digital sales channel allow customers to browse products, place orders, and arrange deliveries without interacting with members of the Company’s sales personnel.

L Brands’s physical retail operations are also largely self-service, with customers free to browse products, completing purchases sales through the Company’s in-store sales staff. The Company seeks to provide an enjoyable retail experience to its customers, with its sales personnel able to provide guidance and personalise assistance, including with regard to fit and style. It endeavours to attract repeat business through the quality of its products and customer care.

L Brands offers customer support, providing contact details for its customer care teams through its brand-specific websites. Customers are able to contact these members of staff by phone or via an online contact form and receive personalised responses to queries and complaints. L Brands and its various brands operate social media accounts – including with Facebook, Twitter, Instagram, Pinterest, and YouTube – through which it can provide updates on its products and interact with customers directly.

Key Activities

L Brands operates as a specialty retailer women’s intimate and other apparel, and personal care and beauty items. The Company aligns its operations into three reportable business segments: Victoria’s Secret, which designs and sells women’s lingerie, hosiery, swimwear, as well as other apparel and products such as fragrances; Bath and Body Works, develops and sells home fragrance and personal care products, including shower gels, lotions, soaps, and sanitisers; and Victoria’s Secret and Bath and Body Works International, which includes the Victoria’s Secret and Bath and Body Works company-owned and partner-operated stores outside of the US and Canada. The Company also operates retail chains for its lingerie brand La Senza and its designer handbag brand Henri Bendel.

Key Partners

L Brands works closely with a range of companies and organisations throughout the design, production, and sale of its products. Thee partners can be organised broadly into the following categories:

• Supplier and Procurement Partners, including suppliers of materials and equipment used in the development and manufacture of the Company’s products, as well as suppliers of services and technologies that are utilised more broadly across the enterprise;
• Manufacturing Partners, comprising various specialist contract manufacturing companies to which production functions can be outsourced;
• Franchise and License Partners, including the Company’s network of franchisees, licensees, and wholesale partners that operate the Company’s retail stores outside of the US and Canada;
• Strategic and Marketing Partners, comprising companies across multiple business sectors, with which the Company collaborates on various branding, marketing and other projects; and
• Community and Charitable Partners, including various non-profits and charitable organisations with which the Company collaborates on social and community projects around the world. L Brands has a number of partnerships in place. This includes a franchise partnership with Alshaya to market Bath and Body Works products, a branding partnership with wearable technology company Misfit, and technology partnership with messaging app Frankly.

Key Resources

L Brands’s key resources are its brands and intellectual properties, its design and product portfolio, its materials and supply chains, its online portals, its IT and communications infrastructure, its physical network of retail outlets, its partnerships, and its personnel.

L Brands has a number of patents and trademarks registered in the US and internationally that are key to its activities. Searches of records published by the US Patent and Trademark Office identified patent applications filed in the names of L Brands’s key brands, including applications entitled ‘Strap for a garment’, ‘Brassiere with surface ornamentation’ and ‘Hook and eye closure assembly’.

L Brands also owns and or leases numerous physical properties around the world. This includes its distribution, corporate and product development facilities across the US, Canada, the UK, Hong Kong, and other locations, as well as its network of retail outlets for its various brands.

Cost Structure

L Brands incurs costs in relation to the development of its products, the procurement of supplies and materials, the development of its online portals, the maintenance of its IT and communications infrastructure, the operation of its physical retail chains, the implementation of marketing and advertising campaigns, the production of fashion events, the management of its partnerships, and the retention of its personnel.

In 2015 L Brands recorded total cost of goods sold, buying, and occupancy in the amount of $6.95 billion, and general, administrative, and store operating costs totalling $3.01 billion.

Revenue Streams

L Brands generates revenue in the form of sales of its various brands – notably Victoria’s Secret, Bath and Body Works, La Senza, PINK, and Henri Bendel – through digital and physical retail channels.

In 2015 L Brands recorded annual net sales of $12.15 billion, up slightly on the $11.45 billion recorded by the Company in 2014. The majority of this revenue came through the Company’s Victoria’s Secret stores, which along generated sales of $6.11 billion, with a further $1.56 billion coming from Victoria’s Secret Direct sales. The Company’s total Bath and Body works sales for the year were recorded at $3.59 billion.