EFTA Document EFTA01779154

From: Sent: Wednesday, January 5, 2011 10:52 PM To: [email protected] Subject: Hi AND Victoria's Secret's Secret Victoria's Secret =80 s Secret The man behind the company that made lingerie mainstream and mall-=riendly. (Page 1 of=3) <=SPAN>Phil Carle / AP A Victoria's Secret store in Ta=lahassee, Fla. When Leslie Wexner got into the underwear busin=ss nearly 30 years ago, there was a great divide. American women wore Fru=t of the Loom, Hanes, or Jockey, pragmatic panties bought in packs of thr=e at mass retailers. Department store lingerie was dowdy, referred to as="foundation garments," and the fancier items were saved=for special occasions, like one's honeymoon. More modern unmentio=ables—lacy thongs and padded push-up bras—were available=alongside feathered boas and provocative pirate costumes at Frederick =80 s of Hollywood. Then Wexner, the founder of The Limited, purcha=ed Victoria's Secret, a small San Francisco chain headed into ban=ruptcy, and lifted lingerie out of the red-light district, launched it on=o the runway, and landed it right into the underwear drawers of mainstrea= America. With prime-time fashion shows, sexy TV ads, steamy catalogs, an= a presence in nearly every shopping mall in America, the company =9Cmade intimate apparel front and center," says Marshal Cohen, ch=ef industry analyst at the NPD Group, a market-research company in Port=Washington, N.Y. Wexner "took the secret out of Victoria'= Secret." (Cohen also credits Wexner with the "whale tail=E2 —underwear peeking out of the pants—and other fas=ion phenomena: "He made it a trend; all of a sudden women wanted=people to see what they were wearing [underneath], and innerwear became=outerwear.") Over the past 28 years, by making sexy lingerie=affordable, accessible, and acceptable, Columbus, Ohio-based Victoria =80 s Secret has created a middle ground in intimate apparel. The compan= woke up a sleepy category, one that took in $10.75 billion in 2009, doub=e what it was when Wexner started. Retail experts say Victoria's=Secret has made department stores more aggressive and fashion-forward. Ad=itionally, it has opened the doors wider for smaller brands like Hanky Pa=ky and Josie Natori, and allowed bigger brands like American Eagle Outfit=ers, Chico's, and Abercrombie & Fitch to carry their own ling=rie lines. Even practical panties are sexier and more relevant. Jockey an= Hanes now both sell thongs. "This is now a category with much gr=ater diversity," says Wendy Liebmann, CEO of WSL Strategic Retail=in New York. Other players "have been forced in a positive way to=become more competitive." Wexner, 73, is an unlikely candidate to upend=the American underwear industry. He's quiet and reflective, and=he dresses conservatively. (In the early days building his business, he=says, he was frequently thought to be the company attorney.) He's=been on a quest to find the "purpose of life" since his=mid-30s, which may have contributed to his emerging as one of his generat=on's most generous philanthropists. (He gave $250 million to set up the Ohio Higher Education Trust in the=early '90s <http://www.nytimes.com/1991/03/09/us/ohio-trust-gets-250-million-=ift.html> .) He sells sexy underthings to young women and has=talked in the past about the "moral compass" that guides=him. Perhaps most unusual is that Wexner never wante= to go into retail. He spent his childhood watching his parents run a clo=hing store, named Leslie's after him, and he was turned off by ho= they worked 80-hour weeks and barely scratched out a living. "Gr=wing up I knew you were supposed to have a profession," he said=in 2003, "and something that was better than being a shopkeeper,=which is what my parents were. I didn't want to go into the retai= business. I hated it." Wexner enrolled in law school, only to find tha= he wasn't creatively stimulated enough, so he spent study breaks=drawing designs for stores and storefronts. ("Some people made er=tic drawings or wrote their girlfriend's EFTA_R1_00096193 EFTA01779154 name," he has sa=d. "I did stores.") He soon dropped out and began pitchin= in at his parents' store, where he discovered that the business=profited most by selling skirts, sweaters, shirts, and blouses—ty=ical sportswear separates—not by selling dresses and coats, as hi= father believed. It was the entrepreneurial epiphany for a store=that Wexner, then 26, wanted to call Leslie's Limited and refocus=to sell women's sportswear separates. Wexner had been an entrepre=eur since he was 9 (early for-profit ventures include cutting grass, shov=ling snow, and selling stationery, T-shirts, and toys), but the months be=ore the opening of The Limited in 1963 were harrowing. He had recurring=nightmares and was diagnosed with an ulcer. Wexner, as his parents had,=invested inordinate hours, working from 7 a.m. to midnight, washing the=store's windows and doing his own bookkeeping. But it was his ide= that paid off the most. Women wanted separates and appreciated a new, mo=e modern way of buying clothing. Wexner opened another five stores in the=following years and took the business public in 1969. Ten years later, he=had 300 Limited stores and began to demonstrate an appetite for acquisiti=ns, buying and growing brands like Lane Bryant. It was on a business trip in San Francisco in=1982 that Wexner discovered Victoria's Secret, founded by Roy Ray=ond, a Stanford M.B.A. graduate. "It was a small store, and it wa= Victorian—not English Victorian, but brothel Victorian with red=velvet sofas," says Wexner. "There wasn't erotic=lingerie, but there was very sexy lingerie, and I hadn't seen any=hing like it in the U.S." Months later, with Victoria's=Secret on the verge of bankruptcy, Raymond called Wexner and asked if he=wanted to buy the company. Wexner got on a plane to San Francisco that da= and agreed to purchase the four stores and a catalog for $1 million. Wexner says he had "intuition"=that it would be a good business, but he didn't know anything abo=t lingerie and he had no immediate plans for the company. He had just bou=ht Lane Bryant and was growing a new brand, Express. "[Victoria=E2 s Secret] didn't make any money," he says, =9Cbut I saw ingredients in it. What if we mixed it up differently? =9D Wexner then began thinking—as a bachelor. (He got married abou= 10 years later.) "Most of the women that I knew wore underwear=most of the time, and most of the women that I knew I thought would rathe= wear lingerie most of the time, but there were no lingerie stores, =9D he says. "I thought if we could develop price points and produ=ts that have a broader base of customer, it could be something big. =9D The company moved Victoria's Secret to=its headquarters in Columbus and infused the brand with its retail expert=se—boosting the selection of merchandise from just one model of=everything to a large assortment with colors and textiles that related to=the fashion industry. It focused on consistency of fit, which created cus=omer loyalty. The company expanded nationally, opening its boudoir- style=stores in areas in which it had catalog customers. "The marketing=was pretty primitive," says Wexner, "but it worked. =9D They finessed the formula, moving bras and fitt=ng rooms from the front to the back of the store ("Being in the=front made for some odd moments flashing the world," says Wexner.="We had to take the fact that people were in their birthday suits=into consideration.") They played classical music and soon custom=rs began requesting the compilations, and the company began to sell CDs.=The famous fashion show, with legendary supermodels strutting in lavishly=jeweled bras and feathered wings, became a cultural moment. A steamy comm=rcial during the 1999 Super Bowl sent millions of visitors to the Victori='s Secret Web site, and a billion people in 100 countries logged=on to watch the show. "The great thing that Wexner did was re=ognize the huge white space in the market that was unspoken for, and he=brought in innovation," says Craig Johnson, president of Customer=Growth Partners, a retail consultancy in New Canaan, Conn. "He ma=e sexy mainstream. That was his genius." But Wexner, still a rese=ved Midwesterner who has been the chairman and CEO of the company =94now known as Limited Brands and including brands such as Bath and Body=Works, Pink, La Senza, and Henri Bendel—for more than 45 years,=doesn't see anything "genius" about it. "= didn't invent anything. I didn't invent the bra or store= or the name," he says. "I just see things differently.=E2 Still, when it comes to how women think about the most pragmatic=items they wear, that's made all the difference. 2 EFTA_R1_00096194 EFTA01779155