Catching a Fallen Angel: M&S and Next eyeing up Victoria’s Secret UK arm

July 5, 2020

2 min read

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What's going on here?

Following the collapse of Victoria’s Secret’s UK arm on 5 June (to see our article on that, click here), competition has broken out between prominent high street retailers Marks and Spencer (M&S) and Next in a bid to take control of the lingerie brand’s UK operations.

What does this mean?

Victoria’s Secret is bouncing back: administrator Deloitte is “reviewing a range of possible outcomes” for the company to rebut future uncertainty. With UK stores now allowed to reopen, investment in high-profile brands is one way to boost confidence in lucrative markets and widen consumer access. 

M&S’s lingerie portfolio is already impressive, with the brand boasting 27% of the UK lingerie market share, 36% of which is bras alone. Victoria’s Secret would enable M&S to gain access to a younger consumer base, in line with its strategy of increasing sales through “complementary guest brands to broaden appeal and increase online growth”.

On the flipside, Next is a credible contender due to its existing catalogue of brands called Label, which includes Hugo Boss, Abercrombie & Fitch and Lipsy (which are all aimed at younger demographics). This could place Next in a favourable position due to its success at selling third-party brands with a wider consumer appeal. Moreover, a deal favouring M&S would potentially be more surprising due to doubts whether Victoria’s Secret’s jaded brand image would be a positive addition to M&S’s corporate identity.

What's the big picture effect?

This story highlights a positive consequence of gradually easing coronavirus lockdown measures. Despite 39% of retailers reporting a total shutdown of UK activity due to the virus, there is clearly a reignited consumer demand from alleviating restrictions which will prove fruitful for companies looking to make acquisitions.

If M&S were to win the battle, major competition issues could arise due to its already substantial presence in the lingerie market. An acquisition of Victoria’s Secret UK would easily see M&S’s lingerie market share soar and push competitor brands such as Boux Avenue and Ann Summers further down the hierarchy. This would guarantee greater levels of scrutiny from regulators if companies are trying to monopolise their respective markets.

For law firms, this acquisition will represent a starting gun as the opportunity to represent the buyer would prove lucrative. Extensive due diligence would be required to assess potential risks in the transaction by investigating the obligations and liabilities of the target company. Equally M&A, IP, finance, competition and tax departments will be needed to see the acquisition through.

Ultimately, the crucial point in this potential acquisition is creating a desirable long-term brand image for Victoria’s Secret, who has regularly come under fire for its outdated, often sexist image. Whatever the outcome, an overhaul of its current values will give the brand a resurgence in popularity as it transitions into its new era of inclusivity and modernity with its eventual buyer.

Report written by Evangeline Taylor

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