The negative outlook on global lingerie giant Victoria’s Secret for this year is unlikely to have a major impact on Sri Lanka’s apparel industry, a major supplier to the high end lingerie brand. Sri Lanka is the largest supplier of products on Victoria’s Secret’s supply chain.
A negative guidance has been announced for Victoria’s Secret for 2017 and the first quarter of 2017, coupled with a mid-teen year-on-year fall in sales from its stores in February, due to a restructuring effort where the lingerie brand will focus on core products, while shedding swimwear, footwear and other apparel.
In 2016, the lingerie giant posted net sales of $12.57 billion, with cost of sales, buying and occupancy of $7.45 billion. Sri Lanka supplies around 800 million dollars out of its $4.7 billion total apparel exports to Victoria’s Secret annually. However, pressure isn’t just coming from Victoria’s Secret. Marks & Spencer’s is converting its clothing and household units into more profitable food units due to competition from online and budget retailers.
Many other traditional retailers are also facing stiff competition. Sri Lanka’s exports to the world declined slightly from September to December 2016, with exports to the US and the EU—which account for 85 per cent of Sri Lankan apparel exports—falling or remaining flat.