Victoria's Secret has closed down its flagship store in Causeway Bay, Hong Kong, becoming the latest multinational brand to down its shutters amid a plunge in tourism in the country due to the coronavirus pandemic. The American lingerie brand also laid off all its employees in the Hong Kong store.
The coronavirus has affected the entire global economy, with the travel and retail sectors becoming its biggest casualties. The store had signed a 10-year lease in 2017 and now will have to pay millions of dollars for terminating the contract early, which might further bite into the profits of the company.
An Early Exit
The high-profile Victoria's Secret store was closed down rather abruptly on Thursday, which was a public holiday in Hong Kong. The employees were laid off a night earlier. However, the precise reason behind the closure is still unknown although speculation is that the luxury brand became the latest casualty of the coronavirus pandemic.
The retailer posted a simple paper notice on the door on Thursday that read, "We regret to inform you that we have closed the Victoria's Secret Flagship Store at Causeway Bay in Hong Kong. You will be available to shop online on our international website."
The American lingerie, clothing, and beauty retailer had opened the four-storey flagship store with much hype and hoopla in 2018. One of the levels was dedicated exclusively for its brand Pink and another for high-end products, complete with the city's most luxurious fitting rooms.
The store that was being operated by Limited Brands, Victoria's Secret's US parent, was paying $903,000 a month for space. The company signed a 10-year lease in 2017 for the store, which was once occupied by retail giant Forever 21. It took almost one year for Limited Brands to open the store and the lease was to be in place through August 2027. However, the decision to close the store means Limited Brand might end up paying $77 million for early termination of the lease.
Not a Smooth Journey
The coronavirus pandemic might have been hurting retailers but Victoria's Secret has been struggling for a while now. The Hong Kong store was launched at a time when the brand was already experiencing a slump in sales in the United States. The Hong Kong journey was rather more difficult.
Victoria's Secret had been facing stiff competition from Hong Kong's affordably priced fashion-forward lingerie brands like Peach John and 6ixty8ight from the day it launched the store. Also, the company had to cancel its annual Victoria's Secret fashion show in 2019. The crisis further got highlighted following the COVID-19 outbreak as the company permanently decided to close 250 of its stores in the United States and Canada last month, while its UK business has filed for bankruptcy.