Victoria's Secret: We're too sexy

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.

• Talk back: What's wrong with Victoria's Secret?

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.

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.

Continued: Lacquered-black stores, neon-pink accents

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