Adore Me gives Victoria's Secret a digital makeover
Victoria’s Secret gets more than product diversification from its $400 million cash acquisition of online intimates brand Adore Me.
Why it matters: The move could give the lingerie maker the digital push it needs as it tries to revamp its image, attract fresh customers and add new brands to the mix.
Driving the news: Victoria’s Secret will buy 100% of the digitally native startup for $400 million in cash.
- It will throw in a further cash consideration as well, part of it fixed and the other part based on the achievement of certain performance and growth targets over two years.
What they’re saying: "We believe this acquisition further bolsters [Victoria’s Secret’s] product offering and technological capabilities and could ignite additional growth opportunities for the company moving forward," Jefferies analyst Corey Tarlowe says.
Details: In addition to expanding its market share in the intimates category, there are several areas Victoria’s Secret can leverage from the acquisition.
- Adore Me’s technology could help modernize Victoria’s Secret’s own digital platform and improve its customer shopping experience.
- The New York startup’s technology-driven merchandising model will allow Victoria's Secret to provide garments with a better fit and sizing to shoppers, “which is key to unlocking new customer growth and retention,” according to Cowen analyst Jonna Kim.
- Adore Me’s subscription model, which allows customers to try on clothing at home, can also be used to keep recurring customer engagement and lower return rates.
By the numbers: Adore Me expects $240 million in revenue this year.
- Around 82% of the digitally native startup’s revenue was through mobile devices last year, a Jefferies analysis found.
- About 76% of its revenue came from repeat customers as of Sept. 30, per Jefferies.
- Adore Me has over 1.2 million active customers.