Source: PaxForex Premium Analytics Portal, Fundamental Insight
Retail giant Walmart is taking one of its most successful billion-dollar brands and completely revamping it to better represent "inclusiveness, body positivity and styles that prioritize comfort and confidence."
While these are worthy goals, they don't explain why the retailer needs to change what has been a resounding success so far. It risks losing the connection between consumers and one of their favorite brands.
Walmart has announced that it is changing the name of its private label intimate apparel and sleepwear brand Secret Treasures to Joyspun to offer new and better fabrics and styles while maintaining the retailer's signature discount prices.
As the clothing category undergoes changes to recognize that there are many body styles out there, Walmart felt it necessary to start virtually from scratch - what Walmart's executive vice president of apparel and private label called "more of a startup job." The Secret Treasures name was dropped, Joyspun was added, and a team of in-house designers created a new collection.
That's all well and good, but it doesn't explain why the Secret Treasures brand, which had been part of Walmart's portfolio since 1999 and generated more than $1 billion in annual sales last year, needed to be eliminated.
While it seems obvious that Walmart didn't want to be even indirectly associated with Victoria's Secret after the company was criticized over the years for promoting what many considered an unattainable body type, it's hard to believe that anyone buying intimate apparel and sleepwear at Walmart would be confused about what was on sale. And the billion-dollar sales threshold showed that consumers were definitely not concerned.
Private label brands have been at the core of Walmart's DNA for decades, first introduced back in 1983. Anyone who has shopped at one of the retailer's supercenters is familiar with the Great Value brand, which, according to market research firm Numerator, was purchased by nearly 73% of all U.S. consumers. In fact, Walmart owns the top four spots on the list of the top five private label brands.
CEO Doug McMillan said the company's private-label products are growing faster than Walmart's overall sales, and while Great Value alone produces more than $27 billion a year, sales of 18 of them exceed $1 billion. Secret Treasures is one of them, so replacing it with the perhaps more unfortunate Joyspun name could interrupt that growth trajectory.
Walmart has a long and complicated history with fashion, and an unfortunate track record whenever it tries to veer off its path. Previous attempts to enter the high-end clothing market have failed, and most of them have had to be abandoned. At least, in this case, the company maintains the everyday low prices that consumers turn to Walmart for.
While the changes are being made with the laudable goal of making the intimate apparel and sleepwear the company sells appealing to a wide range of consumers, that could have been accomplished under the Secret Treasures brand as well.
The question is, are consumers looking for that particular brand of clothing, or would they buy everything on the shelf? Since Secret Treasures has been so successful for Walmart, investors should hope that it doesn't cause a reversal in the brand's growth trajectory.
As long as the price is above 135.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 140.64
- Take Profit 1: 143.00
- Take Profit 2: 150.00
Alternative scenario:
If the level of 135.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 135.00
- Take Profit 1: 130.00
- Take Profit 2: 125.00
