The rise and fall of Victoria's Secret, America's biggest lingerie retailer
AP Photo/Mark Lennihan
Victoria's Secret is the largest lingerie retailer in the US and has been for several decades.
It has had a powerful role in defining what sexy is in the modern day via its racy lingerie and annual runway shows.
But after achieving explosive success in the late 1990s and 2000s, the brand has struggled in more recent years and has been accused of losing relevance.
In February, the company promised to execute a turnaround under new management after selling a 55% stake in the Victoria's Secret brand to a private equity firm and announcing that its' longtime CEO and chairman would step down.
Plans of a comeback are now under threat, however, as the private equity firm that was due to take a majority stake in the company is now trying to back out of the deal.
Here's the story of the rise — and more recent fall — of the brand.
You'd be hard-pressed to find anyone in the US who hasn't come into contact with Victoria's Secret in one way or another. Since the late 1990s, Victoria's Secret has been one of the best-known and most talked-about brands in the country — increasingly, not in ways that it might hope for.
But it has had a powerful role in defining what sexy is in the modern day via its racy lingerie and annual runway shows and in its heyday, these enabled the company to achieve blockbuster sales and reach global status.
Increasingly, the tide turned, however. Sales slipped, customers complained that quality had dropped, and analysts became more skeptical about the brand's future if it refuses to adapt in the era of #MeToo.
In February, the company took action, announcing that it was selling a 55% stake in the Victoria's Secret brand to a private equity firm that promised to execute a major turnaround effort. L Brands' longtime CEO and chairman Les Wexner also stepped down from the company at that time after nearly six decades at the helm.
But its hopes of a comeback are now under threat. On Wednesday, the private equity company that was due to acquire a majority stake in the brand filed a lawsuit in which it sought to back away from the deal.
Find out more about how the company achieved success —and stumbled more recently — below:
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Victoria's Secret was founded in 1977 by American businessman Roy Raymond.
Wikimedia Commons
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's Secret
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.
Getty/Astrid Stawiarz / Stringer
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.
Nicholas Hunt/Getty
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.
AP Photo/Adam Nadel
Source: The Telegraph
The brand began to cement its image over the next few years. In 1995, its famous annual fashion show was born.
AP Photo/Terry Gilliam
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.
AP Photo/Mark Lennihan
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
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.
YouTube/Derek Dahlsad
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.'
AP Photo/Stephen Chernin
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.
AP Photo/Richard Drew
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.
Dimitrios Kambouris/Getty Images
Source: Business Insider
Turney abruptly stepped down in 2016 and was succeeded by Wexner as interim CEO.
L Brands
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.
Courtesy of Spanx
Between 2015 and 2018, sales began to falter.
AP Photo/Mary Altaffer
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.
Facebook/Aerie
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.
Business Insider/Mary Hanbury
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.
Business Insider/Mary Hanbury
"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.
AP Images
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.
Getty Images/Dia Dipasupil
Razek made a formal apology online but some of his critics called for him to step down.
Less than a week after Razek's comments went viral, Singer resigned.
AP Images/ Evan Agostini
Source: Business Insider
Singer was replaced by John Mehas, who took over the role at the start of 2019.
Agostini/Invision/AP
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.
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.
AP Photo/Jay LaPrete
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.
Charles Sykes/Invision/AP
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.
Getty/ Dominique Charriau / Contributor
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.
Astrid Stawiarz/Getty Images for Fragrance Foundation
Source: Business Insider
And on November 21, the company confirmed that it had officially canceled its runway fashion show that year.
Dimitrios Kambouris/Getty Images
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.
Astrid Stawiarz/Stringer and Patrick McMullan/Getty Images
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."
In February, 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.
Jay LaPrete/AP Images
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."
But its hopes of a comeback under new leadership are now under threat after Sycamore Partners filed a lawsuit to back out of the deal on Wednesday.
REUTERS/Brendan McDermid
Sycamore said that Victoria's Secret's actions taken during the coronavirus 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.
In response, L Brands issued a statement saying that a termination of the agreement is "invalid" and that it "will vigorously defend the lawsuit and pursue all legal remedies to enforce its contractual rights."
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