I considered myself ahead of the curve when last April I wrote “Victoria’s Secret: Behind the Curve.” Now, I consider myself behind the curve, so to speak. I should have written in that same article that Henri Bendel was even further behind the curve than VS. Recently, L Brands, headed by famed Les Wexner, and owner of both brands along with Bath & Body Works, La Senza and Pink, recently announced that it would close all 29 Henri Bendel stores and its website in January. Perhaps he should have read the Bendel’s curve differently and not have acquired it in the first place in 1985 for a little over $3 million.
Wexner stated his logic for the closures: “We have decided to stop operating Bendel to improve company profitability and focus on our larger brands that have greater growth potential.”
Henri Bendel was a blip on The Limited’s, and subsequently L Brands’ radar screen, bringing in sales last year of a mere $85 million out of L Brands’ total revenues of about $12 billion. And they were operating at a loss for at least the past two years. In fact, Henri Bendel never amounted to any more than a blip since Wexner acquired it. At the time, he was declaring it could become a billion-dollar brand. It never came close, estimated to have reached $100 million in sales at its peak. So, one could say the brand might have been “curving” into maturity from the day Wexner acquired it.
However, we’ll never really know. Because at the time he acquired it, CEO and part owner of Bendel, the iconic, Geraldine Stutz, who between 1957 and 1985, had transformed the money-losing retailer into a money-making classy, chic, modern and very upscale Manhattan specialty store, left in 1986. Upon the acquisition, Stutz was initially very enthusiastic about being able to expand the unique model that was Bendel’s, using The Limited’s “deep pockets.” So, her departure in 1986 was surprising. And it was downhill from that point forward.
Observers in the industry said at the time that Leslie Wexner, chairman of The Limited, had interviewed several candidates for Ms. Stutz’s job. Perhaps Wexner, with his inimitable out-sized ego and penchant for running things his way, ran into another potential equal retail star in Ms. Stutz, and decided he needed total control.
So, in my opinion, it’s doubtful that in 1985, when Bendel’s shiny halo was a go-to luxury shop full of unexpected surprises and unique experiences, that it was about to curve into maturity. I do believe Bendel would have had a chance to scale nationally by maintaining its special model under the leadership of Ms. Stutz offering her dazzling curation and celebration of all things coveted by savvy, stylish customers.
The Victoria’s Secret Distraction
But that was not to be. Furthermore, and a potential larger reason for Bendel to float off quietly into the night, forever to be a blip on the larger screen, was the fact that three years earlier, in 1982, Wexner had acquired the Victoria’s Secret brand, store and catalogue for $1 million. He also bought 207 Lane Bryant stores that year, and a chain of Lerner stores in 1988. But, forget those two. Victoria’s Secret was a self-propelled rocket ship to the moon.
In 1983, Wexner repositioned the Victoria’s Secret’s brand. At the time, “modern, sexy and European lingerie” were a few defining characteristics of the brand, appealing to the new age of confident feminists and men who would browse the stores, looking for sexy gifts for their wives or significant others. By 1986, (one year after the Bendel acquisition and Stutz’s departure), Victoria’s Secret was the only national chain of 100 lingerie stores, expected to grow to 400 by 1988. And today, of course, there are over 1000 stores in the U.S., (and more overseas) and the brand still has close to a 30 percent share of the lingerie market.
So, is it possible that the VS rocket was a distraction from the strategic positioning of Henri Bendel for future growth? Along, of course, with the mistake of losing Geraldine Stutz? I believe it was. VS was just too seductive.
Has the VS Rocket Flamed Out?
As pointed out in my previous article, VS comp store sales declined every month in 2017, and were down six percent in the fourth quarter alone. Sales were down between 10 percent and 14 percent toward the beginning of the year and by single-digit numbers toward the end of the year. Is the rocket flaming out?
Will Victoria’s Secret soon follow the fate of Henri Bendel, but for a different reason? When Bendel would be everything today’s customers ask for – inspiring experiences, unique merchandise, a store of shops that were ever-changing, VS has become irrelevant among the new young consumer culture.
As this new, largest generation of shoppers powers full-on creation of their own new world, Les Wexner will realize that today’s new world speedboats (as I like to call the new brand upstarts) now circling his aging battleship picking off a share here and there, have suddenly fired enough shots across the bow that his ship will soon sink. And VS’s demise will not be solely a behind-the-fashion-curve product problem. It will be a brand problem; the whole enchilada of its brand positioning and the many years and billions of dollars that Victoria’s Secret has spent pounding into our brains precisely what the VS brand stands for. Therefore, it doesn’t even matter if they pivot their fashion styling to serve the desires of the new consumer culture. The brand has simply become irrelevant.
Victoria’s Secret is entering maturity. it doesn’t mean the brand has to die. Levi Jeans and the Gap have significantly declined in size over the years, but they continue to slog along. But VS will have to find a new customer base or live with the fact that its business is scaled back forever.
So, Mr. Wexner, even though you seem to be behind the curve on VS, enjoy the challenge of managing a smaller, mature brand that will hopefully be a profitable brand appealing to the fewer legacy consumers who still love what it stands for.
It’s too bad you didn’t give Henri Bendel, under the leadership of Geraldine Stutz, the same focus and runway where she might have reinvented the rocket ship and soared to success.