The rise and fall of Victoria's Secret, America's most famous lingerie retailer
Victoria's Secret was founded in 1977 by American businessman Roy Raymond.
He named the brand after the Victorian era in England, wanting to evoke the refinement of this period in his lingerie.
His vision was summed up by Slate's Naomi Barr in 2013: "Raymond imagined a Victorian boudoir, replete with dark wood, oriental rugs, and silk drapery. He chose the name 'Victoria' to evoke the propriety and respectability associated with the Victorian era; outwardly refined, Victoria's 'secrets' were hidden beneath."
He went on to open a handful of Victoria's Secret stores and launched its famous catalog.
By 1982, the company was making more than $4 million in annual sales, but according to reports, it was nearing bankruptcy at the time. It was at this point that Les Wexner swooped in.
Source: Slate
Wexner, who founded L Brands (formerly Limited Brands) was already making a name for himself in the retail world as he gradually built up an impressive empire.
By June 1982, The Limited — which had previously acquired Express and Lane Bryant — was listed on the New York Stock Exchange. One month later, under Wexner's leadership, the company acquired Victoria's Secret's six stores and its catalog for $1 million.
Wexner turned Raymond's vision on its head, creating a store that was focused on women rather than men.
He was closely following the European lingerie market of that time and wanted to bring this aesthetic to the US. So, he set out to create a more affordable version of European upscale brand "La Perla" — lingerie that looked luxurious and expensive but was affordable.
And it worked. By the early 1990s, Victoria's Secret had become the largest lingerie retailer in the US, with 350 stores nationally and sales topping $1 billion.
Source: The Telegraph
The brand began to cement its image over the next few years. In 1995, its famous annual Fashion Show was born.
The show, which was run by Ed Razek (now chief marketing officer of L Brands), became an iconic part of the brand's image.
Razek and his team were responsible for hand-picking the models to walk the show. Because of this, he became one of the most important people in the modeling world, helping to launch the careers of Gisele Bündchen, Tyra Banks, and Heidi Klum.
In 1999, the show aired for the first time online. Time described it as the "internet-breaking moment" of this era after 1.5 million viewers tried to tune in and crashed the site.
Source: Time
Meanwhile, the brand was also launching some of its best-known and most successful products, including its heavily padded Miracle Bra and Body by Victoria.
Body by Victoria was a "blockbuster success" and more than doubled the sales volume of any other bra that Victoria's Secret had previously launched, Michael Silverstein wrote in his book, "Trading Up."
Around this time (1997), the idea of the Victoria's Secret "Angel" came into play after a commercial featuring Helena Christensen, Karen Mulder, Daniela Peštová, Stephanie Seymour, and Tyra Banks ran to promote its "Angels" underwear collection.
From then on, the term "Angel" become synonymous with the brand.
Throughout the '90s and early 2000s, its commercials featured heavily made-up and scantily dressed Angels.
Razek hired the best photographers and television directors in the world to make commercials for the brand.
The runway shows became more lavish. In 2000, model Gisele Bündchen walked the runway in what was then the most expensive item of lingerie ever created, a $15 million diamond-and-ruby-encrusted "Fantasy Bra."
It's been tradition for an Angel to wear a "Fantasy Bra" at every runway show since 1996. These change each year.
Source: Insider
In 2000, Sharen Jester Turney came on as CEO of Victoria's Secret Direct, heading up its catalog business.
According to reports at the time, Turney wanted to remove the "hooker looks" in the catalog and made the aesthetic more like Vogue than Playboy.
She became CEO of the whole brand in 2006. Under her nine-year tenure, the company thrived; sales increased by 70% to $7.7 billion.
Source: Business Insider
Turney abruptly stepped down in 2016 and was succeeded by Wexner as interim CEO.
Wexner made a series of quick and fast changes: killing the catalog, swimwear, and apparel to focus solely on lingerie, the core part of its business.
He also split the brand into three — Victoria's Secret Lingerie, Victoria's Secret Beauty, and Pink — and recruited a CEO for each division.
Jan Singer became CEO of Victoria's Secret Lingerie in September 2016.
Between 2015 and 2018, sales began to falter.
Victoria's Secret was slow to adjust to a shift from padded and push-up bras toward bralettes and sports bras, missing out on a major fashion trend.
More body-positive underwear brands such as Aerie, ThirdLove, and Lively cropped up, taking making share.
Victoria's Secret was accused of failing to adapt to the times.
Between 2016 and 2018, its market share in the US dropped from 33% to 24%. Some shoppers complained that the quality of its underwear had slipped.
Source: Business Insider
One of its biggest assets, teen-centric brand Pink, also began to struggle. Sales slipped, and it resorted to heavy discounting to woo shoppers.
"We believe Pink is on the precipice of collapse," Jefferies analyst Randal Konik wrote in a note to investors in March 2018, commenting on the level of promotions in store.
Some parents complained that Pink was being brought down by Victoria's Secret's oversexualized ads.
Its annual fashion show drew criticism for being outdated, and viewership slipped. In November 2018 Razek sent the internet into a frenzy after he made controversial comments about transgender and plus-size models.
Razek said in an interview with Vogue that he didn't think the show should feature "transsexuals" because the show is a "fantasy." "It's a 42-minute entertainment special. That's what it is," he said in the interview.
Razek made a formal apology online, but some of his critics said that he should have stepped down.
Former company executives told Business Insider that there was no question of Razek stepping down from his position, as he is "untouchable" in the eyes of Wexner and has full control over the brand image.
Singer was replaced by John Mehas, who took over the role at the start of 2019.
Mehas has his work cut out for him, analysts say. Same-store sales at Victoria's Secret were down 3% in 2018, and it's gradually losing market share to new companies.
Plus, he has angry shareholders to deal with. In March, activist shareholder Barington Capital sent a letter to Wexner, laying out recommendations to improve growth at Victoria's Secret in order to "unlock substantial value."
In the letter, Barington's CEO, James A. Mitarotonda, called out the company's brand image as being "outdated."
"Victoria's Secret's brand image is starting to appear to many as being outdated and even a bit 'tone deaf' by failing to be aligned with women's evolving attitudes towards beauty, diversity, and inclusion," he wrote.
Barington called out the lack of diversity in its board of directors as being an issue for the brand. Of the 12 board members, nine are men.
Source: Business Insider
And it seems Victoria's Secret has taken this criticism to heart. While it did acknowledge the letter in a statement, it has also actively looked to replace three board members to be more diverse, according to The Wall Street Journal.
In March, fans also praised the company for its decision to take on Hungarian model Barbara Palvin as one of its newest Angels.
While she is not a plus-size model, Instagrammers celebrated a post starring Palvin for being more body-inclusive, as they perceived her to be curvier than some of the brand's other models.
"This model actually looks healthy..& I'm loving it!" one Instagram user wrote.
"At last! A real human body," another said.
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