Victoria's Secret: We're too sexy (Image makeover)

Victoria's Secret: We're too sexy
After a weak holiday season, the dominant player in the $10 billion lingerie industry is doing some soul-searching as it contemplates an image makeover.
By The Wall Street Journal


Victoria's Secret likes to ask in its marketing, "What is sexy?" Now the lingerie chain is trying to figure out, "What's too sexy?"
The chief executive of the brand known for its provocative televised fashion shows and alluring stores made an admission Feb. 28. In her mind, the brand has become "too sexy" -- or at least the wrong kind of sexy.
"We have so much gotten off our heritage," CEO Sharen Jester Turney said in a conference call with analysts. Responding to the past year's weak sales and focus-group feedback, she said, "We will return to an ultra-feminine lingerie brand to meet (customer) needs and expectations."
Whatever Victoria's Secret does could shake up the $10-billion-plus U.S. lingerie industry, which the chain owned by Limited Brands (LTD, news, msgs) dominates, with sales of more than $5 billion for its most recent fiscal year. Following a dismal holiday season, during which sales at stores open at least a year dropped 8%, executives have been doing some soul-searching and preparing to take steps to overhaul the brand's image.
Turney cited the brand's recent Super Bowl television commercial as a small move in that direction, describing it as "less seductive." The ad showed a model wearing a modest gray camisole and panties, sitting in a white armchair.
Victoria's Secret blamed its weak sales in the fiscal quarter ended Feb. 2 on the economic downturn and offerings that have veered too much toward young shoppers.
Turney said Victoria's Secret needs to win customers back to its core lingerie business by producing more sophisticated merchandise. It plans to improve the quality of its sleepwear, and has hired executives, including a new head of its beauty division, to bolster its product and store design.The chain, which has about 1,020 stores, also is slowing its expansion plans. Victoria's Secret has been pouring money into a major program of remodeling stores and enlarging them by an average of 50%. In the fall, it opened 23 stores and refurbished 73 locations.
While the remodeled stores have produced sales gains, Turney said, they haven't performed as well as the retailer had hoped. This spring, it will open 31 stores and remodel 45.
Victoria's Secret still plans to hold a fashion show before Christmas. However, Turney said, executives "want to continue to re-invent" the event, which has featured models wearing tiny, sparkling lingerie sets, enormous angel wings and teetering heels.

Apparently, you can be too sexyCEO Sharen Jester Turney wants Victoria's Secret to get back to its brand heritage. "We use the word 'sexy' a lot and really have forgotten the ultra-feminine," she says. Limited is a Columbus, Ohio, company that on Feb. 27 reported a 12% decline in net income for its fiscal fourth quarter. Its shares fell more than 11% to $15.85 on the New York Stock Exchange the following day. Standard & Poor's placed Limited's corporate credit ratings on review Feb. 28 for a potential downgrade. Its current long-term credit rating is BBB-.
Changing customer views will be a huge challenge. Sheri Coulter, a 42-year-old secretary in Flower Mound, Texas, worked at a Victoria's Secret store three years ago. "It was like pulling teeth to get the women our age to come in there," she says. "In our 40s and up, we are sexy -- just not the same sexy a college gal is."
For a time, she says, the store where she worked stopped carrying sizes 38 or larger, embarrassing some older customers who were turned away.

Limited bought Victoria's Secret in 1982, when it had just four stores and a catalog. Under Limited Chief Executive Leslie Wexner, Victoria's Secret improved its quality and toned down racy styles to appeal to mainstream customers.
In the 1990s, professional women shopped the pastel-painted stores for colorful, European-inspired lingerie, supplementing underwear wardrobes previously filled with black, white and beige styles. Soft music played in the background while saleswomen discreetly offered help.
But over time, Victoria's Secret adapted to a changing culture. Women began wearing camisoles and bustiers as outer garments, the growth of the Internet made skin-baring photographs ubiquitous, and teen pop stars such as Britney Spears gyrated on stage in revealing costumes.
One reason Victoria's Secret got off track, Turney said, was the success of its Pink brand, which launched in 2002 and aimed to introduce college students to Victoria's Secret stores. Pink has grown tremendously; in October, an executive said it would probably reach $900 million in sales for 2007.
But as teens and 20-somethings snapped up Pink underwear and pajamas, too many other product lines at Victoria's Secret shifted to target that same customer, Turney said.
Today, Victoria's Secret stores are lacquered black, with neon-pink accents and oversize images of scantily clad models. Pounding music pumps through the loudspeakers. Malls endure protests from parents who are outraged by window displays that feature suggestively posed mannequins.Although basic colors and styles still account for much of the Victoria's Secret bra business, new merchandise lines, such as one from French lingerie brand Chantal Thomass, are far less modest than older fashions.
The word "sexy" is everywhere: on the "Very Sexy" makeup and bra lines, on the "Sexy Little Things" room of risque underwear and on the chain's Valentine's Day list of "What is Sexy." (Victoria Beckham and Dallas Cowboys quarterback Tony Romo made the cut this year.)
Older shoppers have noticed the brand's orientation toward a younger, flashier look. They don't want the merchandise to become dowdy, but their image of "sexy" is more refined.

Apparently, you can be too sexyCEO Sharen Jester Turney wants Victoria's Secret to get back to its brand heritage. "We use the word 'sexy' a lot and really have forgotten the ultra-feminine," she says.
"As a customer over the years, I believe their trend toward a youth-oriented pop style is anything but sexy," says Cecil Van Houten, a 53-year-old shopper from Bath, N.Y.
While purchasing perfume at a Victoria's Secret store with his wife recently, Van Houten noticed that most of the display area "was taken up by product that looked as though it were designed for teenage girls rather than adult women." The rest of the merchandise, he says, "varied between trashy and uninspiring."
As the giant in the marketplace, Victoria's Secret is vulnerable to competition from all directions. Discounters and department stores, such as Target (TGT, news, msgs), J.C. Penney (JCP, news, msgs) and Kohl's (KSS, news, msgs) have been revamping their lingerie offerings. Teen chains such as American Eagle Outfitters (AEO, news, msgs) have gone after the business, too.
The latest entry is Gilly Hicks, a small intimate-apparel chain started by Abercrombie & Fitch (AEF, news, msgs). With its more-romantic and casual feel, Gilly Hicks has been described by industry watchers as a less-provocative alternative to Victoria's Secret for younger shoppers. But Abercrombie Chief Executive Michael Jeffries has said he doesn't envision the two brands competing for customers.
Meanwhile, lingerie purveyor Fredericks of Hollywood (FOH, news, msgs), which has more than 130 stores and calls itself "the original sex symbol," has focused in recent years on affordable fashion inspired by red-carpet styles. While she wouldn't speak directly to the changes at Victoria's Secret, the chain's Chief Executive Linda LoRe said, "We feel very strongly that there are a lot of different interpretations of sexy. It's about confidence; it's about how you feel."
Turney said Victoria's Secret sees opportunities to introduce both higher-priced and less-expensive merchandise to fend off rivals. That's a strategy that has tripped up other industry leaders, such as Wal-Mart Stores (WMT, news, msgs) that strayed from their roots. Wal-Mart stumbled in its efforts to upgrade its apparel offerings and introduce pricier products. Its sales recovered after it returned to its historical focus on discounting.

This article was reported and written by Amy Merrick for The Wall Street Journal.