: Rihanna’s Savage x Fenty closes funding round, heating up competition in lingerie category

Revenue for the Savage x Fenty brand soared 200% in 2020, according to the announcement, with membership to the “VIP” club growing 150%. Savage x Fenty was founded in 2018.

Media reports on Wednesday were that LVMH Moet Hennessey Louis Vuitton SE will pause the high-end Fenty apparel brand, which it launched in 2019.

Read: Hanesbrands stock soars after plans to exit PPE & European business, focus on Champion brand

The lingerie category has grown increasingly crowded in recent years. Smaller, digital brands like ThirdLove and Adore Me have launched. American Eagle Outfitters Inc. AEO, -1.71% has seen its Aerie brand soar.

Savage x Fenty has not only made a name for itself with its celebrity ties, but for its inclusivity, even as merchandise leans into sex appeal. Like Aerie, it has picked up on the consumer desire for greater body acceptance and diversity.

As these brands have grown, L Brands Inc.’s LB, -2.41% Victoria’s Secret has struggled to regain its footing. While Savage x Fenty has hosted fashion shows available on Amazon.com Inc. AMZN, -0.83%, Victoria’s Secret has discontinued its runway extravaganza, which once aired on network television, but had seen its ratings decline.

Same-store sales at Victoria’s Secret fell 9% over the holidays, however Bath & Body Works, another part of the L Brands lineup, reported a 17% same-store sales increase. L Brands plans to separate the companies.

Still, L Brands is on a growth path, with Victoria’s Secret working on a turnaround.

BMO Capital Markets analysts say Victoria’s Secret should follow a “shrink to grow” strategy that will benefit gross margin.

See: Michael Kors is becoming a stronger brand by growing smaller

“Selling $ 5 billion of apparel means, by definition, the brand is hardly ‘dead,’ but low profit means it’s very ‘sick,’” wrote analysts led by Simeon Siegel in a January note.

“[W]e previously discovered that Victoria’s Secret’s profitability problem centered around gross margin, posing a picture of a brand underearning because it was overselling… And although it is horrible to say, it seems increasingly clear that COVID-19 likely provided the catalyst to affect change, helping Victoria’s Secret become smaller and healthier.”

BMO rates L Brands stock outperform with a $ 64 price target.

L Brands stock has more than doubled over the past year, up nearly 103% over the past year. The benchmark S&P 500 index SPX, -0.11% has gained 16.7% for the period.