L Brands shutters legacy retailer Henri Bendel to focus on already struggling Victoria’s Secret.

What happened

  • After 123 years of operation, the heritage retailer Henri Bendel will close its 23 stores and cease operating its site beyond the 2018 holiday season. The company first opened a storefront in Greenwich Village in 1895, selling fragrances, apparel, beauty and handbags and remained a trailblazing luxury retailer in New York for decades.
  • L Brands acquired the company in 1985, after which the company stopped selling apparel, choosing to focus instead on handbags and accessories. The parent company has sold off other straggling brands in the past (Express, Abercrombie and Lane Bryant) and now plans to give even more attention to Victoria’s Secret, which it believes has big growth potential.

Why it matters

  • Henri Bendel is one of many department stores to fold under the pressure of ecommerce and shoppers eager for new experiences. The folding of its Manhattan flagship echoes Barney’s, which closed its Upper West Side store in February 2018 and Lord & Taylor, whose parent company Hudson’s Bay Co. sold parts of its Fifth Avenue flagship to WeWork in October 2017. Though once a progressive luxury retailer that introduced in-store salons and served as a mecca for new designers, L Brand’s acquisition over-expanded Henri Bendel from its New York City flagship to more than 20 locations across 11 states—contemporaneous with this over-expansion, the retailer lost its distinctiveness and brand identity, which it failed to retrieve as other department stores have with a private-label strategy and other exclusive product offerings or experiences.
  • L Brands’ total annual revenue was $12.6 billion in 2017 and the company estimates that Henri Bendel’s 2018 revenue will amount to $85 million, with an operating loss of $45 million. While it was right to shed this lagging business (it’s telling it didn’t even try to sell it), the brand it envisions to propel the parent company into the future—Victoria’s Secret—continues to struggle. In 2017, net sales dropped 5%. But now that it has stripped away another company from its portfolio, the parent company has to be wary of pushing Victoria’s Secret into the same trap as Henri Bendel, which arguably fell apart because of unwillingness to evolve for a new era.
  • Though L Brands removed swimwear from Victoria’s Secret’s assortment in 2016 to latch onto the athleisure trend, more change must occur if the brand is to stay alive—and thrive. Newer lingerie brands are providing for inclusivity in ways that Victoria’s Secret never has at the same time that L Brands’ CEO Leslie Wexner claims that the internet hasn’t had any effect on retail. Consequently, the Victoria’s Secret store experience has largely remained the same—its 1,200 U.S. stores still mostly housed in decreasingly popular malls. The company has also failed to address rising distrust among female shoppers in a brand that historically has catered to men. Maintaining this “no change” mentality—whether or not it was the same playbook that caused Henri Bendel’s downfall—won’t be enough for Victoria’s Secret, or any of L Brands’ companies to stay afloat moving forward.