Lingerie company Victoria’s Secret is known for its flashy fashion shows and supermodel “Angels,” but the brand has had to reinvent itself as it grapples with inclusivity and sexism. The retailer’s 2018 decision to ditch the raunchy annual fashion show in favor of a new direction more in line with the #MeToo climate was a bold move. But will it pay off?
Founded in 1977 by Roy Raymond, Victoria’s Secret was originally a catalog business that focused on selling bras and panties to men. As the company grew, it moved to its own in-house label and began focusing on the female body. But while the company had early success, it was not a financial smash hit. By the 1980s, it was on the verge of bankruptcy. That’s when Leslie Wexner bought the business and tried to revive it. Wexner and his team rebranded the company, shifted its focus from a lads’ mag fantasy to a women’s lingerie empire, and created the runway show. The show became a spectacle that attracted massive audiences, and the “Angels” became the faces of the company.
But the emphasis on sexiness over comfort ultimately hurt sales, and in recent years the company struggled to adapt to changing consumer demands. The brand’s sexy image was called into question by the rise of social media, and the company’s own executives faced controversy. In one explosive interview, former marketing executive Ed Razek questioned whether the public was interested in seeing a model with a plus-size figure walk the runway. The remarks sparked model mutiny, and the brand’s chief marketing officer later apologized for them. Other issues followed, including accusations of cultural appropriation from an outfit worn by model Karlie Kloss that was reminiscent of Native American attire.
The decline of the runway show and the company’s struggles to adapt to new consumer demands were the catalysts for a major rebrand in 2020. The departure of Razek and Wexner, as well as a string of sexual misconduct allegations against Wexner’s ex-fiancée and the company’s long-term relationship with convicted sex offender Jeffrey Epstein, led to a shift in strategy. The brand’s annual fashion show was abandoned, and the Angels were retired in favor of trailblazing models like lesbian soccer champ Megan Rapinoe and trans activist Paloma Elsesser. And the brand expanded its product offerings to include everyday undergarments, sleepwear, beauty, shoes, and PINK, a line that’s appropriate for teenage girls.
But will the rebrand pay off? In a client note Wednesday, BMO Capital Markets analysts led by Simeon Siegel argued that it will. The company’s gross margins have improved and are approaching industry averages, Siegel said. The company is also offering a more inclusive selection of sizes and is introducing its first curvy collection, and its marketing campaigns feature more diverse models. Those efforts should help return Victoria’s Secret to profitability, Siegel added. But it will take time for consumers to embrace the new Victoria’s Secret, he wrote. The company will need to grow its market share in categories such as swimwear and activewear, and increase the quality of its products, he concluded.