Coach says it will stop destroying ‘unsaleable’ handbags after a viral TikTok revealed demolished merchandise discovered in a dumpster

Coach handbags
Coach handbags.

  • Coach said it will no longer destroy “unsalable” handbags after a TikTok video criticized the practice.
  • The viral video showed several slashed Coach bags that were found in a dumpster outside a mall.
  • Coach denied that it destroys bags that are in usable condition or that can be donated.

Coach said it will stop destroying “damaged and unsaleable” bags after a viral TikTok video accused the company of slashing handbags and throwing them in a dumpster outside a mall in Dallas.

Anna Sacks, who posted the video, which has also been shared on Instagram, told her followers that Coach asks employees to deliberately destroy handbags per company policy. She alleged that the company used this tactic as a method to write down the value of its inventory for tax purposes. A spokesperson for Coach said this statement was inaccurate and that there was no tax benefit to destroying the bags.

A post shared by Anna Sacks (@thetrashwalker)

In an Instagram post on Tuesday, Coach said that it would no longer destroy “in-store returns of damaged and unsalable goods.” These items would instead be donated to its reuse handbag repair program, which it offers in stores.

A spokesperson told Insider that employees were previously asked to destroy handbags that could not be used or donated. These are damaged or defective items with issues like holes in the leather, the spokesperson said.

Coach currently offers a repair workshop in 40% of its stores that offers to fix broken bags or accessories. A spokesperson told Insider that the repair team can also deconstruct unusable bags and reuse the materials in other ways.

When Insider asked why the bags found in the dumpster in Dallas were not sent to the repair program, the spokesperson said the company did not have the capacity to handle the repairs. Going forward, however, all bags will be sent to this service, she said.

Other retailers have come under fire for destroying inventory, including Amazon, Nike, Victoria’s Secret, H&M, and Eddie Bauer.

Some companies have used the tactic to protect their brand image by preventing unsold products from ending up in thrift or discount stores.

London-based brand Burberry sparked backlash after it was revealed in 2018 that it had burned $37 million worth of products. In a statement at the time, a Burberry spokesperson said it has “careful processes in place to minimise the amount of excess stock we produce.”

“On the occasions when disposal of products is necessary, we do so in a responsible manner and we continue to seek ways to reduce and revalue our waste,” the spokesperson said.

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Ross Stores’ Q2 sales soared as bargain-hunters spent strongly, but the retailer sees supply-chain and COVID costs on the rise

Ross Stores
The bargain retailer saw sails soar as Americans return to bargain hunting.

  • Ross Stores’ second-quarter sales skyrocketed 75% higher than the same period last year.
  • The economy reopening, stimulus checks, and higher vaccination rates increased foot traffic.
  • Supply chain issues and new COVID variants could threaten the company’s earnings next quarter.
  • See more stories on Insider’s business page.

Bargain retailer Ross Stores beat analysts’ second-quarter expectations and posted lofty sales numbers that were driven by increasing foot traffic and customers spending more on average during each trip to the discount store.

But the company said the current quarter’s results could be hit by higher supply-chain and COVID-related costs.

“We are pleased that both second quarter sales and earnings substantially exceeded our expectations. Sales benefited from customers’ positive response to our broad assortment of great bargains,” Ross Stores CEO Barbara Rentler said during a Thursday evening earnings call. “In addition, our results were bolstered by a number of external factors, including ongoing government stimulus, increasing vaccination rates, and diminishing COVID restrictions.”

Shares of Ross Stores were down about 4.3% in after-hours trading after the company’s expected third-quarter operating profit would miss current Wall Street forecasts and that its same-store sales growth would slump to 5% to 7%.

For the just-reported second quarter, same-store sales rose 15%, with Rentler stating that the children’s category and Midwestern stores performed the best. In the previous quarter’s earnings call, Rentler predicted that the store’s apparel category would attract more demand as the economy reopens and that the store would reap benefits from pent-up consumer demand.

The increasing number of retail stores shuttering and going bankrupt will provide Ross Stores with an opportunity to expand market share, Rentler said. Ross Stores, which owns Ross Dress For Less and dd’s Discounts, will open 65 new locations in the coming year.

The bargain home and apparel retailer bought back 1.4 million shares for $176 million in the second quarter and plans to buy $650 million worth of stock during 2021.

However, Rentler warned that the company could face risks from wild card variants of COVID-19, such as the Delta variant, as well as from worsening supply chain congestion.

“Looking ahead, there remains much uncertainty regarding the sustainability of the positive external factors that benefited our first half results as well as the potential risks we may face,” Rentler said.

In its earning press release, the company said its expectations for the third quarter reflect “our expectation for escalating freight and supply chain costs, and ongoing COVID-related operating expenses.”

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Shoppers are flocking to TJ Maxx for deals as apparel prices soar elsewhere

TJ Maxx
Deals and discounts at a TJ Maxx store.

  • Same-store sales at TJ Maxx and Marshalls were up 18% in the most recent quarter versus the same period in 2019.
  • Shoppers are flocking to off-price stores to nab discounts as prices rise elsewhere.
  • Apparel prices overall were up by a record amount in June.
  • See more stories on Insider’s business page.

Shoppers are flocking to TJ Maxx to stock up on bargains as prices soar elsewhere.

The off-price chain saw sales rise in the most recent quarter as customers splashed out on new clothes to dress up as society gradually reopened.

Same-store sales at Marmaxx US – which includes TJ Maxx and Marshalls – rose 18% in the most recent quarter, ending July 31, versus the same period in 2019. Overall, its parent company saw same-store sales rise by 20% during this quarter versus 2019 across its HomeGoods, Marshalls, TJ Maxx, and TK Maxx brands. Its same-store sales were also up in the previous quarter.

According to data from Placer.ai, which tracks foot traffic analytics, off-price stores have continued to outperform regular apparel retailers over the past few months when it comes to foot traffic.

“It seems that customers who missed the treasure hunt experience at off-price store are now making up for lost time,” the company said in a recent research note.

In a call with analysts on Wednesday, TJX Co said that it is in prime position to benefit from today’s inflationary environment as customers look to stretch their dollars further.

According to the Department of Labor’s June Consumer Price Index, apparel prices overall rose 4.9% in June versus the year before – the largest jump in a decade. In July, they remained flat.

While TJ Maxx is not immune to the industry-wide pricing pressures caused by rising freight and labor costs, it has more room to raise prices without the customer feeling the pinch. This is because TJ Maxx typically sells products at discounts that it says is 20% to 60% less than other stores.

Read more: Off-price retailers like TJ Maxx are adding more niche brands to their vendor portfolio, but experts fear relying too much on lesser-known brands could lead to trouble growing sales

For shoppers who want to go out and fill their baskets full of new clothes without spending too much cash, TJ Maxx can be an ideal option.

“Consumers are eager to treat and indulge themselves after a period of pandemic-induced austerity,” Neil Saunders, managing director of GlobalData Retail, said in an email to Insider. “Given the high volumes of apparel being bought, and the fact that there are pressures on household incomes, TJ Maxx with its strong value for money position has been a major beneficiary of this trend.”

Off-price stores are considered to be more recession-proof than other retailers. When times are tough, consumers tighten their belts and opt for more value-driven shopping experiences.

The years leading up to the pandemic indicated that bargain-hunting is popular even in a strong economy, as TJ Maxx and its rivals reported consistently strong growth.

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Victoria’s Secret reveals gymwear collection, cashing in on a booming market that former staffers say it neglected for years because it felt ‘sweat is only sexy when you’re having sex’

Victoria's Secret new on point collection
  • Victoria’s Secret launched a new gymwear collection this week, featuring leggings and sports bras.
  • It’s part of the brand’s turnaround effort, during which it has also ditched its iconic Angels.
  • Former staffers said the old management team refused to sell sports bras, which were deemed unsexy.
  • See more stories on Insider’s business page.

Victoria’s Secret launched a new collection of gymwear this week, signaling it wants to take on Lululmeon and cash in on a booming market that former staffers say it neglected for years.

The new collection, called “On Point,” is modeled by one of the brand’s new spokeswomen, Olympic skier Eileen Gu.

It comprises a mix of leggings, sports bras, and other clothing in three different fits and fabrics. Victoria’s Secret said each fit is tailored to a specific activity: one for running errands, one for yoga, and one for high-intensity workouts.

Its “sweat” leggings, recommended for high-intensity sports, cost $60, while sports bras across the collection cost between $40 to $50.

A post shared by Victoria’s Secret (@victoriassecret)

The push into gymwear is a major shift in strategy for the lingerie giant, and is part of its turnaround effort under a new management team.

It ditched its iconic Angels earlier this year, saying they were no longer “culturally relevant.” At the time, it said that it would partner with activists and entrepreneurs for its new image.

Read more: POWER PLAYERS: Meet the 8 Victoria’s Secret executives helping the company shake off years of scandal and slumping sales

In recent interviews with Insider, former longtime senior employees said that under the leadership of former L Brands CEO Les Wexner, and CMO Ed Razek, the company had missed key market opportunities – including athletic wear.

“If it wasn’t a push-your-boobs-up-to-your-chin bra, they didn’t want anything to do with it,” one woman who worked in a management role at Victoria’s Secret’s New York office for more than 12 years told Insider.

“To them, sweat is only sexy when you’re having sex,” she said of their refusal to sell sports bras.

This potentially cost the company market share as brands such as Lululemon and American Eagle’s Aerie grew in popularity. Victoria’s Secret’s market share dropped from 33% to 24% between 2016 and 2018.

The founder of Lululemon, Chip Wilson, revealed in his book about the story of Lululemon, “Little Black Stretch Pants,” that Victoria’s Secret once made an offer to buy his brand in the early 2000s.

“We were flattered, but it didn’t take us long to agree that wasn’t a direction we wanted to go,” he wrote in his book.

Read the original article on Business Insider

Victoria’s Secret is working with former Angels even as it drops scantily dressed models for activists and entrepreneurs

Victoria's Secret ditches its Angels
Angels at the Victoria’s Secret runway show in 2018.

  • Victoria’s Secret will keep working with some former Angels, its new creative director told the New York Post.
  • It’s abandoned the Angels concept but some former Angels will still model for the brand.
  • Victoria’s Secret is in the middle of a major rebrand after years of struggle.
  • See more stories on Insider’s business page.

Victoria’s Secret will continue to work with former Angels even after it abandoned the concept last month, its new creative director has said.

In an interview with The New York Post, Raúl Martinez said: “The word Angel is retired but that doesn’t mean the women we worked with as Angels are retired.”

Martinez told the Post that at least three former Angels will continue to model for the brand, including 25-year-old Taylor Hill, 24-year-old Grace Elisabeth, and 52-year-old Helena Christensen.

Victoria’s Secret announced in June that it was scrapping its Angel brand because it was no longer “culturally relevant.” It said that instead, a group of seven activist and entrepreneurial women – including Indian actor Priyanka Chopra Jonas and the professional soccer player and gender-equality activist Megan Rapinoe – would become spokeswomen for the brand.

This announcement was part of the brand’s major overhaul under a new management team.

Read more: POWER PLAYERS: Meet the 8 Victoria’s Secret executives helping the company shake off years of scandal and slumping sales

Martinez took on the position of creative director at the start of the year and has been tasked with bringing the brand to life visually. He works closely with the design and marketing teams and has the final say over anything from what photographers Victoria’s Secret hires to shoot campaigns, to what fonts it uses in its ads.

The name Angel was first coined in 1999, when models Helena Christensen, Karen Mulder, Daniela Peštová, Stephanie Seymour, and Tyra Banks appeared in an ad to promote the Angels underwear collection.

In the late 1990s and early 2000s, the Angels and the annual Victoria’s Secret runway show had a powerful role in defining “sexy” in the modern day. More recently, it has been criticized as outdated and out-of-touch.

Read the original article on Business Insider

Iconic luxury department store Harrods will now rent you clothes from high-end designers, and $1,000 dresses cost $20 a day

Harrods
The window display at Harrods in London’s Knightsbridge.

  • UK luxury department store Harrods will now let shoppers rent designer clothes.
  • Prices start at $8 a day to rent a designer top. There is a four-day minimum rental period.
  • Dresses that would normally cost more than $1,000 to buy can be rented for about $20 a day.
  • See more stories on Insider’s business page.

One of the world’s most iconic luxury department stores, Harrods, has joined a growing list of retailers joining the fashion rental market.

London-based Harrods has partnered with a UK fashion rental marketplace My Wardrobe HQ to let customers rent the designer brands sold at its Knightsbridge store.

Prices start at $8 a day for a minimum of four days to rent a designer top. Dresses that would normally cost more than $1,000 to buy can be rented for about $20 a day.

According to Business of Fashion, Harrods will provide the stock and My Wardrobe HQ will handle the logistics and marketing. Customers can rent the clothes via My Wardrobe HQ’s website or in its pop-up location at the Harrods store.

The fashion rental business is booming, spurred by companies such as Rent the Runway launching subscription-based services for customers to rent clothes. Increasingly, retailers have been partnering with clothes-rental sites or launching their own services, such as Urban Outfitters’ Nuuly.

For Harrods, it’s a way of using last season’s inventory that was stuck in stores over the pandemic.

“There have been many spectacular collections and stand-out pieces that haven’t had the chance to be seen or celebrated, so offering these pieces to our customers to rent for their next event is a way of giving these products a new life,” Harrods fashion director Lydia King told WWD.

“Our fashion customers have more weddings, birthdays and other celebrations than ever before, and the joy of event dressing is back,” she said.

Read the original article on Business Insider

Gap could shutter even more US stores after closing 81 in the UK, analysts warn. ‘We’re in for some radical right-sizing.’

A Gap employee packs shopping in a bag while a customer pays
Gap is closing its UK stores.

  • Retail analysts are worried that Gap will be forced to close even more stores in North America.
  • Gap said Wednesday that it’s shuttering all its 81 stores in the UK and Ireland.
  • One analyst also said that Gap’s new Yeezy and Walmart lines smacked of “desperation.”
  • See more stories on Insider’s business page.

New York, Paris, Milan, London: the fashion capitals of the world. The four cities are home to the flagship stores of every clothes retailer with designs on the global market.

Yet Gap, the international retail icon famed for its laid-back American style, will soon be gone from London: it said this week that it’s closing all its 81 stores in the UK and Ireland. And in Paris and Milan, Gap’s future is uncertain: it’s in talks to offload some or all of its French and Italian businesses.

It’s no secret that Gap has been closing stores in North America for years amid falling sales. There were 552 Gap stores in the region at the end of May this year – precisely half the number there were a decade earlier, company figures show. In October last year, it set out plans to shutter 350 Gap and Banana Republic stores in North America by 2023.

However, retail analysts interviewed by Insider said that Gap’s drastic action in Europe this week signaled that even more stores will need to be shuttered across North America. They also said that the company needed to completely rethink what it’s doing in the US.

“I don’t see them closing all their US stores by any means,” said Natalie Berg, an independent retail analyst. “But I think we’re in for some radical right-sizing. The uncomfortable truth is they still have way too many stores.”

Berg said Gap stores were “no longer fit for purpose.”

“They can’t just be about selling clothes any more,” she said. “You need to give shoppers a reason to ditch their screens; give them an experience they can’t get online.”

Insider has approached Gap for comment.

From September, Gap will be online-only in the UK and Ireland. Berg said: “Lots of clothes retailers are doing the same thing, so now you have all this competition online. You have to ask: is online becoming a digital graveyard for failing brands?”

Maureen Hinton, an analyst at GlobalData, agreed that there was “probably more to go” for Gap’s store closure programme in North America.

She said: “Gap is really struggling to find its own identity – and it has been for a long time.”

Hinton said that Gap needed “a much stronger strategy” for the US, focusing on “what its brand identity is all about – who it’s targeting and how it’s going to do it.”

“It’s got Yeezy at one end and it’s doing things with Walmart at the other,” she said. “That sounds like desperation.”

Gap is banking on a collaboration with Yeezy, Kanye West’s fashion brand, to help reinvigorate its fortunes. The first Yeezy Gap product dropped last month: a limited-edition, bright blue, recycled nylon puffer jacket with a price tag of $200.

Gap’s new tie-up with Walmart is less flashy. The new Gap Home line, sold exclusively in Walmart stores, features a $43 stoneware dinner set and a $20 tie-dye shower curtain.

Shoppers in London won’t get to buy any of these things.

Around midday on Thursday, only a few dozen customers were browsing hoodies, jeans, baby clothes, and other apparel on the four floors of Gap’s UK flagship store on Oxford Street, the heart of London’s shopping district.

Amanda, 24, who shops at the store every few weeks for herself and her three-year-old daughter, said she hadn’t heard it was being shut down. “I wore Gap stuff when I was a kid – my mum put me in it,” she said. “She used to come here too. That’s really sad.”

Read the original article on Business Insider

Victoria’s Secret ditched its Angels after a successful decades-long partnership. Take a closer look at how the concept was born – and why the lingerie chain thinks Angels are no longer relevant.

Victoria's Secret Angel Alessandra Ambrosio
Alessandra Ambrosio walks the runway during the 2017 Victoria’s Secret Fashion show in Shanghai.

  • Victoria’s Secret Angels have been synonymous with the lingerie brand for decades.
  • However, as part of an extreme brand turnaround, the lingerie label is bidding them farewell.
  • But how did Angels come about? Insider tapped into the history of the tradition since its inception.
  • See more stories on Insider’s business page.
This month, after nearly two decades, Victoria’s Secret confirmed that it is ending its Angels brand.

miranda kerr victoria's secret fashion show 2012
Victoria’s Secret Angel Miranda Kerr walks the runway during the 2012 Victoria’s Secret Fashion Show at the Lexington Avenue Armory on November 7, 2012 in New York City.

Its CEO Martin Waters said that the Angels were no longer “culturally relevant” and would not be a part of the brand as it undergoes a major turnaround effort.

Instead, it has taken on a group of seven new spokeswomen – a mix of activists and entrepreneurs to promote its new image.

Priyanka Chopra Jonas
Priyanka Chopra Jonas.

This includes actress and entrepreneur Priyanka Chopra Jonas and soccer player and gender-equality activist Megan Rapinoe. 

Read more: Victoria’s Secret’s new CMO on how the brand’s radically different new image will help it win back disillusioned shoppers

So how did the concept of an Angel first come about and why is it being abandoned?

Victoria's Secret old
Victoria’s Secret’s first Angels.

Models Helena Christensen, Karen Mulder, Daniela Peštová, Stephanie Seymour, and Tyra Banks were the first Angels.

The name was coined in 1997 after they appeared in an ad to promote Victoria’s Secret’s “Angels” underwear collection.

From then on, the Angels became an elite group of models that were carefully selected to become the face and voice of the brand.

Victoria's Secret old

Since the late 1990s, these Angels have become one of the most well-known parts of the brand.

Though there have been hundreds of Victoria’s Secret models over the years, many of which have walked its runway show, not all have made it to the elite status of an Angel.

Victoria's Secret Angels
Victoria’s Secret Launches “Angels 2000” Bra. Daniela Pestova, Stephanie Seymour, Karen Mulder, Ines Rivero.

Through their contracts with Victoria’s Secret, they were required to be featured in campaigns, talk shows, and runway events.

Victoria’s Secret was previously vague about how their contracts worked and what they are actually expected to do.

Elsa Hosk, a former Victoria's Secret Angel
Elsa Hosk wears The 2018 Dream Angels Fantasy Bra at The Plaza Hotel Palm Court on November 5, 2018, in New York City.

But reports indicate that being an Angel requires a big commitment of time and responsibility.

“Becoming an Angel means you are officially part of the family of Victoria’s Secret,” Elsa Hosk said in an All-Access video back in 2015

“You are a spokesperson for the whole brand, and that is such a cool thing because it’s one of the biggest, most amazing brands in the world,” she said. 

Angels get to go home with multi-million dollar pay cheques.

Adriana Lima
Adriana Lima.

Although it is unclear how much angels are paid year on year, many were among some of the world’s highest-paid models. As previously reported by Insider, 11 of the 17 women on Forbes’ list for The Highest Paid Models 2016 have been Victoria’s Secret Angels. 

World-famous models including Gisele Bündchen and Adriana Lima, who hold a superior status with the brand, have finished years with multi-million-dollar salaries, per Insider. In 2018, Bündchen earned $30.5 million and Lima $10.5 million, but other Angels, including Taylor Hill and Jasmine Tookes took home $4 million. 

 

But the level of commitment has meant that Victoria’s Secret has lost Angels in the past.

Karlie Kloss, during her time as a Victoria's Secret Angel
Karlie Kloss pictured (R).

As previously reported by Insider, Doutzen Kroes and Karlie Kloss both pulled out of contracts early to focus on other commitments.

Sources highlighted to Page Six that relatively little pay over time was also a factor in Angels’ decision to depart. “Older contracts like Alessandra Ambrosio used to be in the millions, now they’re like $100,000,” a source told the outlet. 

There have been 41 Angels in total since 1997 when Christensen, Mulder, Peštová, Seymour, and Banks were first taken on.

Tyra Banks
Tyra Banks walks the runway at The Victoria’s Secret Fashion Show at the 69th Regiment Armory November 9, 2005 in New York.

Banks was the first black model to become an Angel.

Over the years, these women became a defining part of its increasingly elaborate runway shows and risque brand image.

Gisele Bundchen at the 1999 Victoria's Secret Fashion show
Gisele Bündchen walks the runway at the 1999 Victoria’s Secret Fashion show.

In 1999, its annual fashion show aired for the first time online and was described as the internet-breaking moment of that time after 1.5 million people tried to tune in and crashed the site.

The year after that, Angel 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.’

Gisele Bundchen wearing the $15 million Victoria's Secret 'Fantasy Bra'
Gisele Bündchen.

The tradition to wear a “Fantasy Bra” at every runway show came about in 1996 when Claudia Schiffer wore a diamond-encrusted bra that cost $1 million. 

The shows became more lavish over the years.

Taylor Swift performs at the Victoria's Secret fashion show in 2014
Taylor Swift performs at Victoria’s Secret fashion show in 2014.

From popular musical acts including Taylor Swift and Kanye West, elaborate costumes and historical venues, to models sporting ornamental Angel “wings,” that can take up to 400 hours of labor, down the runway, the shows became a yearly attraction for many.

Carrying the wings was no easy feat.

Victoria's Secret Angel Alessandra Ambrosio
Alessandra Ambrosio walks the runway during the 2017 Victoria’s Secret Fashion show in Shanghai.

One year, Angel Alessandra Ambrosio revealed in an interview on “Late Night With Seth Meyers,” that she wore one of the heaviest pairs of wings in history in 2011, weighing around 60 pounds, per Insider

Some of the world’s top supermodels including Gigi Hadid and Kendall Jenner were among the catwalk’s line-up but never made it to Angel status.

Kendall Jenner walks the runway at the 2018 Victoria's Secret Fashion Show
Kendall Jenner walks the runway at the 2018 Victoria’s Secret Fashion Show.

Between 2016 and 2018, Victoria’s started to lose market share and its racy brand image. Angels were viewed as being increasingly out-of-touch and out of date in the wake of the #MeToo movement.

This came to a head in 2018, just weeks before its annual fashion show was due to air on television.

Ed Razek
Ed Razek.

Ed Razek, the marketing chief and brains behind the show, caused a backlash after he made controversial comments about plus-size and transgender models in an interview with Vogue.

Read morePeople slammed Victoria’s Secret after its marketing chief made controversial comments about transgender models, but he didn’t resign. This could be why, according to former executives.

When the show aired on TV, viewership numbers sank by 34%.

victoria's secret ed razek
Razek speaks to the 2018 Victoria’s Secret runway models backstage during the 2018 Victoria’s Secret Fashion Show.

The year after, for the first time since it launched in 1995, the show was canceled just after Razek left the company.

The Angels stayed on and in early 2019, a new Angel was announced – Barbara Palvin.

Barbara Palvin
Barbara Palvin.

At the time, fans praised Victoria’s Secret for selecting a more body-positive model, though she wasn’t plus size.

Over the course of 2020, the company underwent some major changes.

Les Wexner

Its longtime leader Les Wexner stepped down and it began the hiring of a brand new executive team. This included a new marketing head and creative director.

And under new leadership, the brand is refocusing its image.

Victoria's Secret
A Victoria’s Secret store in the UK.

“We’re moving from what men want to what women want,” CEO Waters said about the company’s repositioning, in a recent earnings call. “From sexy for a few to sexy for all.”

“It’s about including most women rather than excluding most women and being grounded in real life, rather than mostly unattainable,” he said.

And that apparently means no Angels. 

 

Read the original article on Business Insider

The rise, fall, and comeback of Victoria’s Secret, America’s biggest lingerie retailer

victoria's secret
  • Victoria’s Secret is the largest lingerie retailer in the US, and has been for several decades.
  • It achieved explosive success in the late 1990s and 2000s but has been accused of losing relevance in recent years.
  • The company is currently overhauling its brand image, and has abandoned its Angels for activists and entrepreneurs.
  • Here’s the story of the rise, fall, and subsequent comeback of the brand.
  • Visit Business Insider’s homepage for more stories.
Victoria’s Secret was founded in 1977 by American businessman Roy Raymond.

roy raymond
Roy Raymond (left).

Inspired by an uncomfortable trip to a department store to buy underwear for his wife, Raymond set out to create a place where men would feel comfortable shopping for lingerie. He wanted to create a women’s underwear shop that was targeted at men.  

He named the brand after the Victorian era in England, wanting to evoke the refinement of this period in his lingerie.

Victoria Secret vintage catalog 1982

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.

Les Wexner
Les Wexner (center).

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, 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.

Les Wexner

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.

Victoria's Secret runway show
Victoria’s Secret spring lingerie collection in New York Tuesday, February 6, 1996.

Source: The Telegraph

The brand began to cement its image over the next few years. In 1995, its famous annual fashion show was born.

Ed Razek
Ed Razek.

The show, which was run by Ed Razek (longtime 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.

Victoria's Secret
Model Tyra Banks the Victoria’s Secret fashion show Wednesday, Feb. 3, 1999 in New York.

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.

Victoria's Secret old

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.

Victoria's Secret ad 1997

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.’

Gisele

It’s been tradition for an Angel to wear a “Fantasy Bra” at every runway show since 1996. These change each year.

In 2000, Sharen Jester Turney came on as CEO of Victoria’s Secret Direct, heading up its catalog business.

Sharen Jester Turney

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.

Sharen Jester Turney and VIctoria's Secret models

Source: Business Insider

Turney abruptly stepped down in 2016 and was succeeded by Wexner as interim CEO.

Sharen Turney

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.

Jan Singer

Between 2015 and 2018, sales began to falter.

Victoria's Secret

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.

Aerie
Aerie.

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.

Victoria's Secret

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.

PINK

“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 over-sexualized 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.

Victoria's Secret

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.

victoria's secret ed razek
Ed Razek speaks to the 2018 Victoria’s Secret runway models backstage during the 2018 Victoria’s Secret Fashion Show at Pier 94 on November 8, 2018 in New York City.

Razek made a formal apology online but some of his critics called for him to step down. 

Read more: People slammed Victoria’s Secret after its marketing chief made controversial comments about transgender models, but he didn’t resign. This could be why, according to former executives.

Less than a week after Razek’s comments went viral, Singer resigned.

Jan Singer

Source: Business Insider

Singer was replaced by John Mehas, who took over the role at the start of 2019.

Victoria's Secret runway show 2018

Mehas had his work cut out for him. Same-store sales at Victoria’s Secret were down 3% in 2018, and was gradually losing market share to new companies. 

Plus, he had angry shareholders to deal with. In March 2019, 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. 

Read more: An activist shareholder is urging Victoria’s Secret parent to update ‘tone-deaf’ brand image to boost sales

Barington called out the lack of diversity in its board of directors as being an issue for the brand. At the time, of the 11 board members, nine were men.

Les Wexner
Wexner and his wife Abigail both sit on the board of directors.

It seems Victoria’s Secret took this criticism to heart. After acknowledging the letter in a statement, it appointed two new female board directors — Sarah E. Nash and Anne Sheehan — and made steps to address the comments about the brand image being outdated. 

It hired a more body-inclusive model.

Barbara Palvin

While she is not a plus-size model, fans praised the company for its decision to take on Hungarian model Barbara Palvin as one of its newest Angels.

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.

It also hired its first openly transgender model.

Valentina Sampaio

Brazilian transgender model Valentina Sampaio, shared a photograph of herself on Instagram in August tagging the Victoria’s Secret Pink brand along with the hashtags: “campaign,” “vspink,” and “diversity.”A day later, she shared a video of herself with the caption “Never stop dreaming.”

Her agent later confirmed that she had signed a contract with Victoria’s Secret.

The same day, Wexner announced that Razek would be resigning in the middle of August in a memo sent out to employees.

leslie wexner ed razek
Les Wexner and Ed Razek pose backstage at the 2016 Fragrance Foundation Awards presented by Hearst Magazines – Show on June 7, 2016 in New York City.

Source: Business Insider

And on November 21, the company confirmed that it had officially canceled its runway fashion show that year.

VS fashion show

During a call with analysts after reporting its third-quarter earnings results, L Brands CFO Stuart Burgdoerfer responded to a question about whether the fashion show would run this holiday season. 

“We will be communicating to customers, but nothing similar in magnitude to the fashion show,” he said. 

Wexner previously told employees in May that Victoria’s Secret was “rethinking” the show. And Victoria’s Secret model Shanina Shaik — who has walked in several of its fashion shows — told The Daily Telegraph in Australia in July 2019 that the annual show was off this year. 

While these were potentially positive changes, the brand found itself caught up in a new challenge in the summer of 2019: its CEO and the company being linked to convicted sex offender Jeffrey Epstein.

Epstein/Wexner
Waxner and Epstein

Epstein managed Wexner’s money for several years, and former company executives told the Wall Street Journal that he tried to meddle in Victoria’s Secret’s business, offering input on which women should be models.

Some of Epstein’s victims came forward saying that he used his connection to Victoria’s Secret to coerce them into sexual acts.

L Brands’ board of directors announced that it had hired an outside law firm to review its relationship with Epstein. In September, Wexner addressed his ties to Epstein at L Brands’ investor meeting.

“At some point in your life we are all betrayed by friends,” Wexner said. “Being taken advantage of by someone who was so sick, so cunning, so depraved, is something that I’m embarrassed I was even close to. But that is in the past.”

Read more: Former employees reveal what the billionaire head of Victoria’s Secret is like as a boss as he faces backlash over his ties to Jeffrey Epstein

In February 2020, the company announced that Wexner would be stepping down as chairman and CEO of L Brands but would stay on as chairman emeritus and sit on the board of directors. At the same time, it announced that it was selling a 55% stake in Victoria’s Secret to private equity firm Sycamore Partners.

Les Wexner painting

In a statement to the press announcing the news, Wexner said that Sycamore has “deep experience in the retail industry and a superior track record of success,” and that it “will bring a fresh perspective and greater focus to the business.”

 

In March 2020, the coronavirus pandemic swept across the US and Victoria’s Secret was forced to shutter its stores.

Victoria's Secret

At the end of April 2020, Sycamore filed a lawsuit to back out of the deal, alleging that Victoria’s Secret’s actions taken during the pandemic to close stores, cut back on new inventory, and not pay rent for the month of April were in violation of the agreement that the two parties had made in February.

L Brands immediately issued a statement saying that a termination of the agreement is “invalid,” and that it would “vigorously defend” the lawsuit and “pursue all legal remedies to enforce its contractual rights.”

On May 4, 2020, L Brands announced that the deal with Sycamore had officially fallen apart.

Victoria's Secret

L Brands said that it had come to a “mutual agreement” with Sycamore to “terminate” the deal.

The company also said that it had reshuffled its management team and would focus on “implementing significant cost reduction actions and performance improvements at Victoria’s Secret.”

This included permanently closing as many as 250 Victoria’s Secret and Pink stores in the US and Canada in 2020.

 

 

In the second half of 2020, the brand started to recover, boosted by more sales online.

Victoria's Secret

Jefferies analysts described Victoria’s Secret’s progress as “admirable,” after it reported strong fourth-quarter results in early 2021. 

Bloomberg later reported that L Brands had resumed discussions to sell the brand once more and was seeking a much higher valuation, in the region of $3 billion.

But in May, L Brands put an end to speculation and said that it was no longer looking for a buyer and would split the company in two and spin-off Victoria’s Secret to become a standalone company.

 

 

 

Since then, it has been working hard to execute a turnaround under new leadership.

Victoria's Secret

Read more: Victoria’s Secret is experiencing a major comeback after years of declining sales — and Wall Street is salivating

It has also taken steps to overhaul the brand image. Most recently, swapping its Angels for a new group of activists and entrepreneurial women to be the face of the brand.

Priyanka Chopra Jonas
Priyanka Chopra Jonas.

Read the original article on Business Insider

Victoria’s Secret is finally raising its prices after years of extreme deals on inexpensive lingerie

Victoria's Secret
Promotions were a mainstay in Victoria’s Secret stores in the past.

  • Victoria’s Secret is cutting back on discounts and raising prices, according to a UBS report.
  • The firm has been criticized for its constant promotions, which are thought to erode profit margins.
  • Less discounting and higher prices are crucial for its turnaround effort, analysts say.
  • See more stories on Insider’s business page.

Victoria’s Secret is cutting back on deals and raising prices, and Wall Street is on board.

In a note to clients this week, UBS analysts Jay Sole and Mauricio Serna reiterated their recommendation to buy L Brands stock (the parent company behind Victoria’s Secret) and shared data that showed the level of promotions in Victoria’s Secret stores – which includes its Pink brand – was “declining at a surprisingly fast rate.”

UBS said the average price of an item listed on Victoria’s Secret’s website in May 2021 was $44, a huge 83% increase from May 2019.

It also found that a quarter of the products on its site were on sale in May 2021. This is still a substantial number but a notable improvement on the level of promotions over the past four years, which floated around the 40% to 60% mark.

“This boosts our confidence that the Victoria’s Secret turnaround is real,” these analysts said.

Read more: The rise and fall of Victoria’s Secret, America’s most famous lingerie retailer

Unsatisfied customers

Victoria’s Secret has been strongly criticized by Wall Street in the past for constant promotions in stores. Analysts said these not only erode profit margins but also dampen the brand image and make it almost impossible to encourage customers to pay full price.

It wasn’t uncommon to see 40%-off sale signs littered around its stores between 2018 and 2019, and underwear deals such as five pairs of panties for $28. And major discounts of this kind are usually a sign that retailers are looking to clear unwanted inventory.

In 2019, the company promised to cut back on these promotions and tighten inventory levels but shortly after, discounts began to creep back in. At the time, UBS analysts said that price increases could be putting off customers, causing Victoria’s Secret to go back on its progress.

Victoria’s Secret’s price points have been a contentious subject as some shoppers previously said they felt the brand was still overpriced despite all the deals and discounts. And others said the quality of the clothing didn’t match these price points.

But Victoria’s Secret’s growth over the past few quarters – same-store sales were up 9% in the first quarter of the year versus 2019 and operating income, a measure of profitability, increased by $213 million or 665% – indicates that consumers are becoming comfortable paying more for its apparel and lingerie and that it has a better handle on its inventory levels.

Gabriella Santaniello, analyst and founder of retail research firm A-Line Partners, told Insider that the pandemic enabled Victoria’s Secret to have a “reset,” and cut back on its inventory, which has facilitated more full-price sales, she said.

More inclusive marketing pays off

The company has made considerable changes to its marketing in the past year. And experts say efforts to update its brand image, which critics previously said was out-of-date and oversexualized, have also helped to boost sales.

The marketing is “more subtle and appropriate,” Neil Saunders, managing director of GlobalData Retail, told Insider. It has “fewer sexual overtones and focuses more on more on celebrating women. That has resonated and has pulled some shoppers back to the brand,” he said.

Victoria's Secret
The Victoria’s Secret ad campaigns of 2021 look very different from the past.

And it matches up to what’s shown in stores, Santaniello said: “For example, they recently brought in plus-sized mannequins, which reflects their use of plus-sized models in their advertising.”

Still, the company needs to keep this “360 focus” long-term, she said. “They need to make sure they do not waiver because it will come across as inauthentic and that’s why they haven’t really been successful with the turnaround over these past few years.”

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