Victoria's Secret Goes Public. Now Comes the Difficult Part
The intimates brand's newly won independence comes with big challenges
It was a lengthy (and complicated) road to independence for Victoria’s Secret, but this week it became official when Victoria’s Secret shares began trading on the New York Stock Exchange under the ticker symbol VSCO.
Investors celebrated the brand’s move, bidding up its share price nearly 27% to $58.23 for a market cap of about $5.1 billion.
Now for the difficult part: How to revive a storied apparel brand perceived as behind the curve on issues such as diversity and inclusivity while harnessed to a fleet of mall-based stores?
A deal that didn’t happen
The separation of Victoria’s Secret began in early 2020, when private equity firm Sycamore agreed to pay $525 million for a 55% stake in the brand. But Covid-19 got in the way of that plan, and Sycamore backed out. Ultimately, L Brands decided to split into two public companies.
The challenge Victoria’s Secret now faces is one not all that dissimilar to that of Abercrombie & Fitch and Lululemon nearly a decade or so ago.
The good news is both brands have managed turnarounds. The bad news is those turnarounds took several years, and a good deal of skillful planning and patience, to implement.
And then there’s the obstacle many legacy brick-and-mortar retailers face: managing a large fleet of physical stores. In Victoria’s Secret’s case, that means nearly 870 in North America, with 13% located in less desirable “C” malls and 37% in “B” malls (though 94% of all locations are cash flow positive).
There’s also a multitude of startups from ThirdLove to Shapermint and superstar entertainer Rihanna’s Savage X Fenty lingerie line making the intimates market more competitive.
What’s at stake
One of the central issues for the apparel banner is its slow response to years of criticism, therefore losing precious time and the positive brand equity it had earned from consumers, according to Deb Gabor, CEO of brand strategy consultancy Sol Marketing.
Essentially, Victoria’s Secret is in a race against time, said Allen Adamson, co-founder of marketing strategy firm Metaforce. “Once it becomes your grandfather’s automobile, it’s hard to bring it back,” he said.
Gabor did say there’s still room in the world for a contemporary version of sexy lingerie—if the brand can find a way to do it authentically.
It’s a point underscored by Adamson, who suggested that while Victoria’s Secret should ditch its ’70s Playboy vibe, it must do so for the kind of edgy sexiness that has differentiated the brand in the past, reimagined for the modern woman.
Otherwise, the danger for Victoria’s Secret is that in an attempt to appeal to everyone, it loses the thing that makes it unique, he said.
The question, Gabor said, is, “Do they have enough consumer loyalty that they can convince shoppers to come back?”
Activists, not angels
Victoria’s Secret began the hard work of remaking itself prior to the breakup, including a mea culpa from CEO Martin Waters during a July investor presentation.
The transformation, he said, “begins with the admission that we got it wrong, that we lost relevance with the modern woman, and she told us very clearly to change our focus from how people look to how people feel, from being about what he wants to being about what she wants and to support her in her narrative, in whatever way that she chooses.”
In June, Victoria’s Secret exchanged its well-known Angels for activists, a group that includes soccer star Megan Rapinoe, actor Priyanka Chopra Jones and plus-size model Paloma Elsesser.
The newly minted spokespeople form what the company calls the VS Collective, which “will work to create new associate programs, revolutionary product collections, compelling and inspiring content, and rally support for causes vital to women.”
It’s also partnering with fashion designer Stella McCartney to take on breast cancer via The Victoria’s Secret Global Fund for Women’s Cancers.
Rebranding for a modern woman
The retailer is now known as Victoria’s Secret & Co., with the “& Co.” representing its different businesses: Victoria’s Secret Lingerie, Pink and Victoria’s Secret Beauty.
The new name also gives the brand permission to embrace its roots in edgy sex appeal, albeit a contemporary interpretation that trades the male gaze for an emphasis on women’s personal enjoyment.
“We are committed to creating lifelong relationships with customers by reflecting them, their stories and their journey in everything we do,” Waters said.
One of the bigger investments Victoria’s Secret is making is in its stores, which Waters described as “tone-deaf and starting to become, if not already, culturally irrelevant.”
The remodels will include replacing the imagery, adding lighting and new color schemes, and paring store floors so individual items stand out. Stores will also offer BOPIS services.
Victoria’s Secret will also begin to experiment this fall with three new prototype stores in existing locations, one of which will be off-mall, to better measure impact of the rebuilds.
Shifting to a new brand purpose
All of these various measures the brand has taken thus far, as extensive as they are, should be thought of as buying time to figure out how to sell edgy lingerie in today’s culture, Gabor noted.
While forging its way forward, it’s important for Victoria’s Secret to fulfill its promises, she added. If the brand intends to be more inclusive when it comes to shape, for example, then those wide range of sizes need to be available in its stores.
“Actions speak louder than marketing.”