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Victoria's Secret Looking To Win The Battle Of The Bralettes

American Eagle Outfitters, Inc. NYSE:AEO, LB - Victoria's Secret Looking To Win The Battle Of The Bralettes

Jefferies’ Randal J. Konik mentioned that with back-to-school season in “full swing,” promotions increased sequentially during the weekend of August 27-28, although they remained “fairly controlled” on a year-on-year basis.

“The one exception is the intimates space, where the bralette war continues to wage on, with Aerie (from American Eagle Outfitters AEO 0.25%) upping the ante with $15 bralettes this weekend,” the analyst stated.

Back-To-School Season

Konik believes the trends have generally been robust through August, with American Eagle Outfitters driving the highest traffic and conversion in the teen space.

“As the company has pulled back on the frequency of these store-wide promos, limiting them largely to peak traffic weekends, we believe it has improved the efficacy of these promotions,” the analyst noted. “Undoubtedly, the environment remains highly competitive, and we have noted more retailers opting to use their 'A game' promotions as we get further into the crux of the BTS season.”

However, the analyst also pointed out that the discounting environment was quite rational for the back-to-school season, with retailers being more strategic about their promotions and inventories being well controlled.

The Bralette War

With regard to the “bralette war”, Konik believes the battle intensified over the weekend, with Victoria’s Secret (L Brands Inc LB 0.3%) highlighting its “intro pricing” of $20 for bralettes, along with heaving TV advertising.

“However, aerie appears to be playing to win, upping the ante one level further, with $15 bralettes and $20 bras, the lowest ticket we have seen from the brand thus far. aerie has also been making a bigger push into the active/lounge category as of late, highlighting its new 'Chill, Move, Play' collection,” the analyst went on to say.

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DateFirmActionFromTo
Aug 2016CitigroupMaintainsNeutral
Aug 2016SunTrust Robinson HumphreyMaintainsBuy
Aug 2016NomuraMaintainsNeutral

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