Victoria’s Secret plans to revive its annual runway show in the future – only without its Angels this time.
Victoria’s Secret canceled its runway show in November 2019, 24 years after it launched in 1995. Les Wexner, then CEO of parent company L Brands, said at the time that the company didn’t think “network television is the right fit” for the show and that it was rethinking “literally everything” about the business.
In its heyday in the late 90s and early to mid-2000s, the event attracted millions of viewers. The show, and the costumes, became more elaborate as the years went on.
Ed Razek, the brains behind the show and L Brands’ marketing chief, was considered one of the most influential people in modeling throughout the early 2000s, and helped launch the careers of household names such as Gisele Bündchen, Tyra Banks, and Heidi Klum.
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.
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 More recently, it has been criticized as outdated and out-of-touch.
The lingerie giant said Wednesday that it was partnering with a group of inspirational women – including gender-rights activists and entrepreneurs – to promote a new brand image and shape its turnaround.
These women, who include Indian actor and entrepreneur Priyanka Chopra Jonas and pro soccer player and gender rights activist Megan Rapinoe, will effectively take on the role of the Victoria’s Secret Angels by becoming the face and voice of the brand.
Victoria’s Secret’s Angels have been synonymous with the brand since the late 1990s. These women, who have included some of the world’s most famous models over the years – Gisele Bündchen, Tyra Banks, and Heidi Klum to name a few – were the face of the brand through its marketing campaigns and infamous annual runway shows.
In an interview with The New York Times, Victoria’s Secret CEO Martin Waters said that Angels were not “culturally relevant.”
In its heyday, in the late 1990s and early 2000s, the Victoria’s Secret runway show had a powerful role defining what “sexy” was in the modern day. In more recent times, it has been criticized for being outdated.
Ed Razek, former longtime marketing chief at the brand’s parent company, L Brands, was the brains behind the fashion show. Razek was considered one of the most influential people in modeling throughout the early 2000s, helping to launch the careers of some of the world’s most famous models.
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.
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.
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.”
Wexner later said in a statement that “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.”
But Vanity Fair’s report reveals that Wexner was warned about Epstein previously. Insider contacted an L Brands spokesperson for comment but did not immediately hear back.
Jerry Merritt, who worked for Wexner for 25 years as security chief for The Limited (which later became L Brands), told Vanity Fair: “I told Les, ‘I wouldn’t trust Epstein to cross the street – why are you trusting him with your money?’ ”
Robert Meister, former vice chairman of Aon insurance brokerage, who introduced Wexner to Epstein, told Vanity Fair that shortly after making the introduction he heard concerning stories about Epstein.
“Think of whatever the worst thing anyone could do is, and Epstein did them all,” he told Vanity Fair.
Meister said he later told Wexner not to get involved with Epstein but it was too late. “He thought Epstein was brilliant,” he said.
According to the Vanity Fair report, Wexner was warned about Epstein presenting himself as a Victoria’s Secret scout in New York in the early 1990s.
Longtime Victoria’s Secret catalog CEO Cynthia Fedus-Fields was reportedly alerted to this by an executive at the company in 1993. A source familiar with the matter told Vanity Fair that Wexner was told about this and said: “he would stop it.”
A spokesperson for L Brands did not immediately respond to Insider’s request for comment on the progress of the investigation into Epstein’s connection to the company.
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A mall landlord is suing Victoria’s Secret for $32 million, alleging it has breached its lease contract by closing one of its stores in New York and refusing to pay rent. The store is located in Westfield’s World Trade Center mall in Downtown Manhattan.
According to Westfield’s lawsuit, Victoria’s Secret informed the landlord that it was ending its lease at the start of this year. The lingerie giant said it was invoking its right to a clause in the contract that allows it to cancel its lease early if Westfield fails to keep 75% of the stores in its mall stores open and running for more than 12 consecutive months.
But Westfield alleged in the suit that it had proved to Victoria’s Secret that it was not in breach of this clause and that the retailer, therefore, “had no right” to terminate the lease.
“Nonetheless, Victoria’s Secret refused to pay rent and abandoned its leased premises with years remaining, all in breach of its lease, ” the suit said. “As a result of Victoria’s Secret’s breaches, Westfield has been damaged in an amount that exceeds $30 million.”
A spokesperson for Victoria’s Secret told Insider that it cannot comment on pending litigation.
While Victoria’s Secret’s woes predated the pandemic, this crisis only adds to its problems and the company has been tightening up its business and streamlining costs ever since. This has included a wave of store closings in 2020 and a retreat from the mall.
Its parent company, L Brands, has taken steps to pull Victoria’s Secret and its sister brand, Bed Bath & Body Works, out of underperforming malls. In its most recent earnings call, L Brands said that around 47% of the more than 1,700 Bath & Body Works stores were now located in off-mall locations.
Last month, L Brands said it planned to spin itself into two separate public companies – Victoria’s Secret and Bed Bath & Body Works – after earlier attempts to sell Victoria’s Secret to private equity buyers didn’t elicit offers that L Brands considered equivalent in value to what it could get in a spinoff to shareholders, according to a New York Times report.
Westfield is considered to be one of the most valuable mall chains in the US, however, and is one of few that has managed to survive in a tricky retail environment.
L Brands, the owner of Victoria’s Secret, is reportedly on the hunt for a new buyer after a deal with a private-equity firm fell through last year, and is seeking more than double what it wanted before.
Sources familiar with the matter told Bloomberg wanted a deal that would value the brand at between $2 billion and $3 billion. Previously, Sycamore Partners had agreed to buy a 55% stake in the company for $525 million.
A spokesperson for L Brands did not immediately respond to Insider’s request for comment on Friday morning. L Brands CFO Stuart Burgdoerfer confirmed to Bloomberg that the company wanted a considerably higher valuation this time round, after recouping lost sales at the back end of 2020.
“As a result of the substantial improvement in performance at Victoria’s Secret, various sell-side analysts have valued the business at as much as $5 billion,” Burgdoerfer told Bloomberg.
After several years of sliding sales, the Victoria’s Secret brand has made a comeback in recent quarters after reshuffling management and changing its brand image and marketing, which was accused of being outdated. In a recent note to clients, a group of Jefferies analysts described the brand’s progress as “admirable,” after it reported strong fourth-quarter results.
In March this year, former longtime L Brands CEO Les Wexner stepped down from the board after pressure from investors.
Shares of Victoria’s Secret parent company L Brands climbed Friday after lingerie retailer raised its quarterly earnings outlook, citing stimulus payments to Americans as a pillar of sales support.
L Brands now expects first-quarter earnings of $0.85-$1 per share, higher than its previous forecast of $0.55-$0.65 per share, excluding any charges related to the early extinguishment of debt. Analysts were looking for earnings of $0.62 per share, according to a survey of analysts at Yahoo Finance.
The shares tacked on 6.7% when they hit $63.40. This year, the stock has jumped nearly 60% and has risen over the past 12 months from about $12.50.
“Improved sales trends,” the company gauged, “are primarily driven by unusual shifts in consumer spending patterns, resulting from government stimulus payments, a relaxation of COVID-19 restrictions and other factors.”
The US government this month began sending out $1,400 checks to most Americans to help them deal financially with the COVID-19 health crisis. Meanwhile, more businesses have been reopening services with the vaccination of millions of people in the US against coronavirus. About 14% of the population has been fully vaccinated, according to the Centers for Disease Control and Prevention.
The company said it’s seeing stronger activity at its Victoria’s Secret chain as well as its Bath & Body Works stores.
“The environment remains uncertain, and there is no assurance that these improved trends will continue,” L Brands said.