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.’


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.


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.


“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.

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 experiencing a major comeback after years of declining sales – and Wall Street is salivating

Victoria Secret
Victoria’s Secret was known for its annual runway show.

  • Wall Street is optimistic about Victoria’s Secret’s revival after its parent firm reported Q1 earnings.
  • Same-store sales were up 9% for the first three months of 2021 versus 2019 for Victoria’s Secret brand.
  • Experts cite more inclusive marketing and a management shakeup as key factors.
  • See more stories on Insider’s business page.

Victoria’s Secret is having somewhat of a comeback, and Wall Street is starting to get excited about it.

In L Brands’ earnings call this week, several analysts congratulated the management team on Victoria’s Secret’s first-quarter results. 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%.

“Welcome back,” Marni Shapiro, an analyst at The Retail Tracker, triumphantly said on the call. “I am so excited about this…it’s brilliant and overdue.”

The sentiments of this week’s call stood in stark contrast to its earnings a year ago when the management team was navigating store closings and worker-safety issues brought about by the pandemic.

It was also adjusting to the news that a private equity firm that had agreed to buy a majority stake in the company was pulling out of the deal. This left investors wondering whether Victoria’s Secret would be able to continue its turnaround effort – addressing sliding sales, former sexual harassment allegations, and moving beyond its connection to the Jeffrey Epstein scandal.

How then, did management swing the pendulum around and come to win back Wall Street?

Overtly sexualized ads, the Epstein connection, and harassment allegations

To understand Victoria’s Secret’s “comeback”, it’s necessary to understand its downfall.

Between 2016 and 2020, the brand became the subject of intense scrutiny among investors and the media. After it achieved explosive success between the mid-1990s to mid-2000s with its racy runway shows (which helped to launch the careers of Gisele Bündchen, Tyra Banks, and Heidi Klum), it was increasingly accused of being out of date and oversexualized in its brand image, especially in the wake of the #MeToo movement.

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

Gisele Bündchen victorias secret fashion show 2018
Bündchen walks the runway at the 2006 Victoria’s Secret Fashion Show.

Sales started to dwindle, customers complained that the quality of its lingerie and apparel had slipped, and analysts became more critical as the level of promotions in its stores crept up, highlighting them as evidence that the company was struggling.

In 2019 and 2020, Victoria’s Secret’s troubles were exacerbated after the company found itself tied up in the Jeffrey Epstein scandal. Epstein managed Wexner’s money for several years and was considered a “close friend” of the family. Reports later emerged that Epstein had allegedly used his connection to Victoria’s Secret to coerce victims into sexual acts.

In early 2020, the company then faced a fresh wave of scandals after a New York Times investigation found a culture “of misogyny, bullying, and harassment” at the brand, which longtime marketing chief Ed Razek and Wexner were accused of creating.

Former executives, who held longtime positions at Victoria’s Secret’s corporate offices, told Insider in 2019 that Razek and Wexner had full control over the brand image and made it impossible for any CEO of Victoria’s Secret to update this or make a mark.

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

‘We’re moving from what men want to what women want’

In the time since these explosive reports, both Razek and Wexner have stepped down from the company. Wexner and his wife, Abigail, are no longer on the board of directors but remain L Brands’ biggest shareholders.

And Victoria’s Secret’s executive team and L Brands board have undergone a major shakeup in the past year, gaining a new CEO, Martin Waters, who previously headed up L Brands’ international division.

The lack of diversity on its board, which was criticized by an activist shareholder, has also been addressed. In 2019, out of the 11 board members, nine were men. Today, there are six women on the board, including the chair, Sarah Nash.

leslie wexner ed razek
Les Wexner (L) and Ed Razek (R).

Critics say this shake-up has been crucial for Victoria’s Secret’s comeback by allowing new perspectives and fresh ideas to come through.

“We’re moving from what men want to what women want,” Waters said on the call on Thursday. “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.

Morgan Stanley analyst Kimberly Greenberger said she “applauded” its “long overdue positioning shift,” in a note to clients Friday.

The brand imagery of 2021 looks very different from what Victoria’s Secret had previously been known for; oversexualized ads have been replaced with more body-positive campaigns.

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

Waters said that customers are responding well to these changes.

They “are noticing and uploading our efforts to reposition the brand,’ he said Thursday. “We heard clearly what they [customers and associates] want from us as a brand, which is all about representing and celebrating all women and being there for every moment of their life, including supporting and advocating the things that matter most to them, and that’s exactly what we’re doing.”

According to, Gabriella Santaniello, analyst and founder of retail research firm A-Line Partners, the company is following through on its marketing by enacting real change in its stores. “They recently brought in plus-sized mannequins which reflect their use of plus-sized models in their advertising,” she said in an email to Insider on Friday.

“I think they need to focus on a 360 view of the brand. During the pandemic, they were able to evolve and tie up some loose ends. 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,” she added.

Neil Saunders, managing director of GlobalData Retail, said that more “appropriate” marketing is pulling shoppers back to the brand. As is, a better product assortment.

Victoria’s Secret “has been sensible over the past year and there is a lot of focus on making women feel good whether it be through indulgences or cozy items to wear around the house,” he wrote an email to Insider.

But there’s still work to be done. Waters said the focus now is bringing more innovation to its products, especially around its bread and butter item – bras.

victorias secret Maria Borges
Victoria’s Secret was previously slow to adjust to a shift from padded and push-up bras toward bralettes and sports bras, missing out on a major fashion trend.

Santaniello said that the pandemic gave Victoria’s Secret time for a moment of pause to address its business.

“This past year was just a culmination of strategies they put into place but never fully implemented,” she said. “They were smart in using this past year, which was essentially a reset across all retail, to finally tie up their loose ends.”

During this time, Victoria’s Secret closed 250 underperforming stores and was able to pull back on inventory and cut the level of promotions. This boosted its margins in the most recent quarter.

Still, Saunders says its comeback shouldn’t be overinflated. Some of its performance has been boosted by stimulus spending and a booming consumer economy, he said.

“That rising tide of spending is floating all boats. The real acid test is what performance looks like in the quarters and years ahead,” he added.

Read the original article on Business Insider

The rise and fall of Pan Am

Following is a transcript of the video.

Irene Kim: Pan Am was once the largest international airline in the US. In 1970 alone, it carried 11 million passengers to 86 countries worldwide. Pan Am is also known as the pioneer of multiple features of modern air travel, and it also holds cult status for its iconic aviation style. But after 60 years of flight and decades of financial turbulence, Pan Am went bust. So what happened?

Pan American Airways was founded by two US Air Force majors. It began as an airmail service between Key West, Florida, and Havana, Cuba, in 1927 and was the United States’ first scheduled international flight. Within a year, aviation visionary Juan Trippe took the controls, and Pan Am introduced its first passenger services to Havana. An ad campaign cosponsored by Pan Am and Bacardi successfully encouraged Americans to fly away from alcohol prohibition in the US to drink rum in the sun in Cuba. And Trippe quickly expanded Pan Am’s network.

By 1930, Pan Am was flying routes through most of Central and South America. Crucially, it used a fleet of flying boats, or clippers, to land aircraft on the water at destinations that didn’t have concrete runways for traditional planes. Since they flew seaplanes, Pan Am pilots wore sea captains’ uniforms, a decision that still influences aviation uniforms today. And there were far more important innovations that Pan Am developed in its early days of flight.

David Slotnick: Everything from things we take for granted today, like air traffic control and different flight procedures, different ways of forecasting the weather, of flight planning. Pan Am was the first airline to fly around the world. They actually set a few different records about that. They were the first to fly from the US across the Pacific. It was really a lot. They launched this international service that really helped define what we have today as just regular air travel.

Kim: By 1958, Pan Am offered regular flights to every continent on the planet except Antarctica, giving itself the title of “The world’s most experienced airline.” Pan Am’s modern fleet of pressurized aircraft could fly smoothly above turbulent weather, which provided a comfortable experience for passengers. Its lavish cabins were staffed by a multilingual, college-educated flight crew who served luxurious meals like steak, Champagne, and caviar.

Commercial: On October 26, 1958, Pan Am becomes the first American airline to fly jet aircraft. A Pan Am Boeing 707 streaks from New York to Paris in eight hours. The world enters the jet age.

Kim: The powerful new jet engines, which could fly nonstop over long distances, allowed Pan Am to introduce daily flights to London and Paris. And with the introduction of economy class, Pan Am opened the world of air travel to tourists, not just the rich and famous. In 1970, Pan Am carried 11 million customers over 20 billion miles. Thinking that air travel would only continue to grow, Pan Am invested half a billion dollars in a large fleet of Boeing 747 jetliners.

But this would turn out to be a big mistake.

In October 1973, the Organization of Arab Petroleum Exporting Countries declared an oil embargo against nations, including the US, that were supporting Israel in the Yom Kippur War. By the end of the embargo in March 1974, the price of oil had risen by more than 400%. This hit Pan Am harder than other airlines because of its exclusively long-haul flights, which required more fuel.

Slotnick: They were the launch customer for the Boeing 747. At the time, that was a great airplane for them to buy. That was the right choice, but the oil crisis really changed things for Pan Am. It was all of the sudden the wrong plane to have. It wasn’t the most efficient. It was flying routes that really weren’t selling that well because demand for travel was going down, and that was a very difficult time. But when they made the decision to buy the planes, who would’ve known?

Kim: While Pan Am’s operating costs skyrocketed, the economy slowed, and America’s appetite for international air travel greatly reduced, leaving Pan Am dangerously overcapacity, with huge, half-empty jets taking to the skies. As a result, between 1969 and 1976, Pan Am lost about $364 million and was estimated to be $1 billion in debt.

Pan Am had long hoped to add domestic flights within the US to its operation and even talked to a number of domestic operators, including American and United Airlines, to propose a merger. But rival airlines convinced the US Congress that Pan Am threatened to monopolize US aviation, and the Civil Aeronautics Board repeatedly denied Pan Am permission to operate domestically. But in 1978, the Airline Deregulation Act was passed into United States federal law, meaning the government could no longer control airline routes. Pan Am was now allowed to acquire a domestic system, and it hastily purchased National Airlines for $437 million.

Barnaby Conrad III: It cost a tremendous amount of money to acquire this particular airline, to get the routes. They obviously made a choice. They couldn’t build from scratch. They needed to go out and buy something. You basically had two cultures going on: Pan Am, very worldly, sophisticated, international. Then you had National Airlines. They were sort of puddle jumpers. They were considered country pilots, so there was a mix of culture that didn’t work there. Then you had different kind of aircraft, and so mechanics had never worked on certain airplanes. I think there was a mismatch there too, personnel, different airports. Just in general, it was really a small southern airline that was matching up with an international airline.

Kim: Within a year of the National Airlines purchase, Pan Am lost $18.9 million, even after selling its iconic Manhattan head office for $400 million. Pan Am continued to self-liquidate to offset its losses. In addition to trading its hotel chains, it sold its entire Pacific division to United Airlines.

But Pan Am still had a global reputation as the flagship US airline. However, this claim to fame would attract a devastating terrorist attack above the skies of Lockerbie, Scotland.

Kenny MacAskill: On the 21st of December, 1988, Pan Am Flight 103 took off from Heathrow. It was bound for New York. It was never scheduled to either touch down or land in Scotland. A bomb that had been placed on board accordingly blew up over a small town in the southwest of Scotland called Lockerbie. 259 people all aboard the plane were killed, passengers and crew, and 11 citizens in the small community of Lockerbie were also killed. Pan Am were held culpable and negligent in failing to have adequate security measures. You can have some sympathy for Pan Am, because their defense, if it was a defense at the time, was simply that they had carried out the normal security measures that the entire aviation industry did. But the courts took the view that that was inadequate. They had failed to properly secure the airplane, and as a consequence, a bag had got on board that shouldn’t have been on board in the first place. But Pan Am, you can say, took the hit metaphorically as well as literally for an industry where security standards had not got up to speed.

Kim: The Lockerbie bombing cost Pan Am more than $350 million and proved to be the final blow to the once giant airline.

Just two years later, on January 8, 1991, Pan Am filed for bankruptcy.

After a bidding war, Delta Airlines purchased the majority of Pan Am for $1.4 billion, acquiring its European routes, its northeastern shuttle routes, 45 jets, its mini-hub in Frankfurt, Germany, and its flagship Pan Am Worldport terminal at JFK International Airport. Pan Am hoped to emerge from bankruptcy court, but after realizing it was losing $3 million per day, Delta stopped its cash advances. After failing to raise money from other sources, a phone call was made to Pan Am’s head office on December 4, 1991. The message was: “Shut it down.”

Conrad: Pan American Airways went bankrupt, and they shut down services. It broke people’s hearts, really, not just the people that worked for the airline, but for many other people that flew it and knew it, and it was the flagship airline of America. Pan Am, this legendary airline with its legendary logo, was the second most recognized trademark in the world at the time. A group of friends of mine actually bought those trademarks, and, in fact, I was one of the investors in that group. We bought those trademarks. Unfortunately, Charles Cobb, who was the largest investor, wanted to start the airline again, and we said, “But it didn’t work last time.” We parted ways. He bought us out. He slapped the Pan Am globe on this airline, which is sort of like putting the Pan Am globe on a Greyhound bus. It lasted a couple of months, and it crashed. All the other attempts to do something else with the trademark have failed.

Kim: But Pan Am’s legacy continues to be felt almost 30 years after its collapse. Its innovations remain the pillars of modern air travel. Its brand style has survived throughout the decades as an iconic mid-century fashion statement, with products featuring its sleek, retro logo still being sold. And the Pan Am lifestyle is still romanticized in TV and movies. But the airline itself remains grounded.

EDITOR’S NOTE: This video was originally published in February 2020.

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How Toms went from a $625 million company to being taken over by its creditors

Following is a transcript of the video.

Narrator: Chances are, you once owned a pair of these. That’s because TOMS had the perfect product. Its one for one donation model made buying one of it’s iconic canvas shoes an act of charity. And for a while, that really worked. By 2013, TOMS was reportedly making 250 million dollars in sales a year and had donated 10 million pairs of shoes since it’s launch. Just one year later, the company was valued at 625 million dollars.

Russ Winer: It was a brand that resonated with a lot of, especially younger people at the time that were looking for brands that were not sort of traditional corporate kind of brands.

Narrator: Entrepreneur, Blake Mycoskie, started the company in 2006 because he wanted to give back. Yeah, Blake, not Tom. There was never actually a Tom behind TOMS shoes. The company was originally named Shoes For Tomorrow then Tomorrow’s Shoes and then shortened to TOMS. Mycoskie, who you might recognize from season two of The Amazing Race, was inspired to start the shoe company after a trip to Argentina. The story goes that Mycoskie wanted to help all the kids he saw without shoes. While he was there, a shoe design caught his eye. The Alpargata. Comfortable and affordable, the Alpargata is an everyday shoe for many Argentinians. A local shoe maker helped make an updated version for TOMS and came up with a buy one, give one model. Soon, the shoe was everywhere.

Russ Winer: It got some publicity and just grew very rapidly. It had a huge amount of demand at the beginning. Hollywood stars started wearing the shoes and there’s all this buzz around the shoe and they grew into what it is today.

Narrator: TOMS slip on canvas shoes, became synonymous with the brand turning into what marketing pros call a hero product.

Russ Winer: A hero product is a product that is the archetypal brand, all right, for a company, the one that’s the most successful that people think of when you think of the company. So, for example, like Nike, it could be Air Jordans, for Porsche, it might be the 911.

Narrator: It’s like how when you see Hermes, you think of the Birkin bag or associate Heinz with Ketchup. For TOMS, it was the original shoe, based on the Alpargata. Paired with its charitable giving model, TOMS seemed unstoppable.

Russ Winer: TOMS branding and marketing was very effective because it was one of the first companies that used this buy one, give one kind of philosophy to try to appeal to not only consumers that liked good looking shoes, but also were interested in companies that had some kind of corporate social responsibility angle.

Narrator: People saw it’s logo and immediately thought of it’s shoes and its charity work for kids. Which could explain why people were willing to spend anywhere from $48 to $78 on a pair of TOMS canvas shoes. But it turns out, having a hero product can backfire.

Russ Winer: The hero product for TOMS shoes is the Alpargata variant or model of the shoes and they relied on that one model too long. The hero product can become stale at some point if it’s not rejuvenated.

Narrator: Not to mention, TOMS slip on shoe design was easy to copy. So, competitors did and they sold them for much cheaper. Skechers even named it’s version BOBS and donated two pairs of shoes for every pair sold. All this made consumers question whether TOMS was even worth the price. So, just as quickly as it had become a staple, TOMS became a fad. Even though TOMS had expanded it’s product line, people just couldn’t see beyond its original canvas shoe. While TOMS shoe donation program had been innovative and interesting when it launched, it became almost mainstream, copied by so many other brands. People also started questioning whether TOMS shoe donations were actually helping anyone. Something that TOMS had contacted an outside research team about looking into back in 2010. The research team found that the program wasn’t actually that significant.

Bruce Wydick: TOMS was really quick to take the results of the study into consideration so they talked to us about giving away the shoes as a reward for school attendance so kids actually feel like they earned them and they began to develop more alternative kinds of shoes that would last longer.

Narrator: TOMS continue to grow its giving program to be more effective. In 2011, TOMS expanded its brand to include sunglasses. Sales from sunglasses went directly to people in developing countries, for treatments like cataract surgery.

Bruce Wydick: As a person that has pretty high prescription glasses, I can attest to the fact that, personally, like a lot of people, this is a really impactful intervention for many people. Cataract surgery can restore a life.

Narrator: In 2014, Tom started TOMS Roasting Company. It said it would donate a week’s worth of clean water for every bag of coffee it sold. The next year, TOMS teamed up with anti-bullying organizations with a line of backpacks. But despite all these changes, when most people saw TOMS, they only thought of it’s original product and program. So, TOMS had a hard time growing beyond its hero product and its sales struggled. The company had a harder time regaining control over its business because it had relied so much on wholesale when it first started out. Doing this had helped TOMS build it’s brand recognition even faster because its shoes were sold at big department stores like Macy’s and Bloomingdale’s and even at Whole Foods. But a direct to consumer model has a lot of long term advantages. You have more control over your marketing and inventory and most importantly, over prices. All this can help you control your profit margins. Something that’s kind of important when your sales are starting to slump. But instead, TOMS didn’t pivot its business model as quickly or strongly as it should have. Its outlook continued to decline in 2019. TOMS had a 300 million dollar loan due in 2020. Credit rating agencies expected it wouldn’t be able to pay up. So, is this the end for TOMS? Well, in late 2019, a group of TOMS creditors officially took over the company from Bain Capital and Blake Mycoskie in exchange for debt relief. When Business Insider reached out to TOMS, a representative said that, quote, “The new owners support TOMS future growth and are investing 35 million dollars into the company.” Unquote. So, TOMS is definitely looking to rebuild itself. But is there a place for it?

Russ Winer: TOMS biggest obstacle right now is just the fact that there is so much competition in the shoe business and some brands have in fact gone bankrupt. If you look at brands like Rock Port, right? Which is a well known brand, take a look at Pay Less Shoes which is a retailer. There’s just a lot of competition in this market and very difficult to make a sustainable business.

Narrator: So, what should TOMS do?

Russ Winer: I think the smartest strategy for TOMS right now actually is to focus less on the corporate social responsibility angle and focus more on product. I think they need to develop more product variety, styles, colors that consumers want to buy and I think that’s the area they should focus on.

Narrator: And Winer says there’s something else TOMS needs to work on.

Russ Winer: A lot of successful brands that started as direct to consumer like Warby Parker, like a Casper, like others, Bonobos for example, started only direct to consumer, went to retail, gave their customers a chance to again experience the brand and today, brand experience is extremely important for consumers to have a strong affinity of the brand. I think TOMS has to do more of that.

Narrator: But even if TOMS isn’t able to recreate it’s original success, it still made a lasting impact on the worlds of business and fashion. Brands having a social mission might be commonplace today, but TOMS was the one that made it mainstream. Despite everything, TOMS might still be the best at it.

Bruce Wydick: I’d say TOMS is one of the most nimble organizations that I’ve worked with as a development economist. They have a whole department that’s devoted to impact evaluation.

Narrator: In November 2019, TOMS announced that it would be evolving its one for one giving model. TOMS will now be donating one dollar for every three dollars it makes. According to the company, this creates a more flexible and sustainable way of giving.

Bruce Wydick: I think TOMS is a learning organization and when it comes to development and poverty interventions, trust me, we’re all learning. That’s the key.

Narrator: So, who knows? With the right product, TOMS could be the next big thing again.

EDITOR’S NOTE: This video was originally published in May 2020.

Read the original article on Business Insider