iStock.com/Robert Way
August 16, 2024
Can a Merchant-First CEO Revive Victoria’s Secret Fortunes?
Shares of Victoria’s Secret & Co. surged earlier this week following news of the appointment of Hillary Super, most recently CEO of competitor Savage X Fenty, as CEO to guide the next stage of the lingerie chain’s turnaround efforts.
The 30-year retail veteran started her career in Mervyns’ executive training program in 1994. Super went on to merchandise and operational roles at Wet Seal, Old Navy, Ann Taylor, American Eagle Outfitters, Guess, and Maris Collective before earning credit for leading the turnaround of the women’s apparel and accessories business at Anthropologie as co-president and eventually global CEO.
She joined Fenty in June 2023, replacing pop star and founder Rihanna. At Fenty, she’s credited with launching a new collection, “Soft N’ Savage” with a more muted and toned-down color palette, representing a shift to more subtle and wearable styles versus its traditional loud statement pieces.
“We believe now is the right time to take the next step on our journey with new merchant-operator leadership to fully capitalize on the opportunities ahead for VS&Co.,” said Victoria’s Secret’s chair of the board, Donna James, in a statement shared in the company’s press release.
She added, “We are particularly impressed with her merchant leadership capabilities paired with an operator’s discipline and bias for driving value creation. She understands vertically integrated retail brands and has an intuitive understanding of the consumer landscape, informed by customer insights which are critical for consistently delivering in this industry and its ever-accelerating fashion and economic cycles.”
Super said, “I am excited to join VS&Co, the market leader in the domestic intimates category. The strength of these iconic brands, supplemented by an incredible beauty business, provides numerous opportunities for future growth.”
She succeeds Martin Waters, who became CEO in 2021 over a year after the chain canceled its famed The Victoria’s Secret Fashion Show amid criticism over the chain’s oversexualized imagery at the height of the #MeToo movement.
Waters was credited with “building an inclusive culture,” including adding more inclusive sizing and diverse models. Waters also expanded the chain’s digital capabilities, repositioned the international business for growth, and spearheaded the chain’s spinoff in 2021 from L Brands, which also included Bath & Body Works. Waters formerly led from L Brands’ international unit.
Other aspects of the chain’s turnaround efforts include emphasizing newness; expanding swim, sport, and apparel offerings; revamping its loyalty program; bringing back the Victoria’s Secret Fashion Show; and cost-cutting.
While announcing the CEO change, Victoria’s Secret raised its second-quarter outlook, marking the fourth consecutive quarter of sequential improvement in quarterly sales in North America.
Net sales are expected to decline in the range of 1% to 2% in the quarter rather than 1% to 3%. Same-store sales fell 9% in 2023 and 8% in 2022.
Beyond facing newer competition from Aerie, Fenty, and Kim Kardashian’s SKIMS, Victoria’s Secret has recently faced general softness in the intimates category due to a pullback in discretionary spending.
Several analysts upgraded the stock due to optimism about the new CEO hire.
Jonna Kim, at TD Securities, said in a note, “Our view is that Victoria’s Secret and Pink have high awareness that can be leveraged with the right merchandise strategy and execution to create higher cultural relevance and customer following.”
Wells Fargo’s Ike Boruchow said in a note that Victoria’s Secret “has recently begun showing some signs of stabilization and this could be the ideal time for the baton to be handed off to the next leader, who can help the brand rebuild its reputation among consumers.”
Morgan Stanley analyst Alex Straton upgraded the stock to “equal-weight” but held off on recommending purchasing shares due to ongoing brand relevance hurdles, competitive pressures, and limited retail turnaround precedents. He wrote in a note, “These dynamics continue to keep us skeptical on VSCO’s longer-term transformation potential.”
Discussion Questions
Was Hillary Super the right CEO hire for Victoria’s Secret to regain relevance in the intimates category?
What other steps or investments may be necessary to revive growth?
Poll
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Jeff Sward
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Victoria’s Secret has made some progress under the tenure of Martin Waters. There have been attempts to reinvent the brand, with a particular focus on making it more inclusive. However, these have not been all that cohesive and there are still huge issues around the position Victoria’s Secret wants to occupy, who its customers are, and how it presents itself to the market. The net result is a brand that is still in decline, both financially and in terms of the loyalty it generates. To be fair, Waters always said he would serve for a set period of time and had no real interest in the long haul needed to reinvent Victoria’s Secret. My view is that Hillary Super will not want to tread water and will be in this for the win. There’s a lot of work ahead, but Victoria’s Secret is a sizeable business that can get back to growth and improved profitability. And, how refreshing to have a woman heading an intimates brand. Why did it take so long?!
Mervyn’s?….uhm OK (a name that ticks the nostalgia box for Eastbayers, but probably less so for the public at large). Certainly she has an impressive resume of diverse retailers; so this isn’t some kind of wild hare. But… but high-single digit comp declines are troublesome – obviously – Is is style issues? logistics? or is the brand just yesterday’s news? If it’s a combination of these it may be hard for one person to turn that around, since they’d need an impossible – or at least unlikely – array of talents.
In particular, “yesterday’s news”.
Victoria Secret’s is in a great position to turn the curve. A merchandising move to expand the product line with more inclusive products may be one of the last foundational shifts needed to change their direction. They have been suffering significant traffic issues driven by the substantial number of locations they have in malls. This issue should now be stable. Their advancements in loyalty and Omni-channel abilities combined with a more inclusive merchandise mix will reap long term rewards.
I find Hillary Super’s background to be a very impressive foundation for the job at hand. She is deeply schooled in vertical mall specialty stores. I am especially impressed with her success at Anthropologie, a retailer I have always had difficulty in describing the brand promise. I also take heart at the recent reinvention and turnaround of Abercrombie & Fitch as a great example of just how dramatic a reinvention can be. They basically changed everything about the aesthetic and attitude and marketing of the company, and it did take years. Victoria’s Secret may not have that long, and while they have to shake off some uncomfortable legacy issues just like ANF did, they may have found the ideal candidate in Hillary Super.
With her vast experience in various retail chains, Victoria’s Secret’s new CEO has the necessary background, and shareholders have responded well to her appointment.
The brand is, however, in the midst of an unfortunate identity crisis that might prevent it from fully recovering until executives are courageous enough to return the brand to its original identity that brought such success in the first place.
A major dysfunction of our modern-day Woke society has led to Victoria’s Secret’s decline. When Victoria’s Secret became necessary to serve the world of “inclusion,” its brand identity was lost.
There is no doubt that this statement will be misunderstood, but why should every brand be inclusive of everyone? Couldn’t certain brands be created and marketed to a specific target audience?
Women with certain body types were sold certain nightwear by Victoria’s Secret. This allowed the company to focus on selling products that appeal to its target audience. The success of this approach was unique.
To regain its original brand identity, Victoria’s Secret could start by re-emphasizing its core products and focusing on the high-quality, luxurious experience that initially set it apart.
Additionally, the brand could revive its iconic marketing campaigns and fashion shows, which celebrated beauty and glamour. Finally, Victoria’s Secret might consider re-engaging with its loyal customer base through exclusive events, personalized shopping experiences, and limited-edition collections.
In the event that this approach offends some individuals, the brand may not be suitable for them; these individuals may walk right by the store and not pay attention to it. Nevertheless, no retail business should be forced to become something it is not. Db
Woke society wasn’t all that led to Victoria’s Secret’s decline. Throw in misogynistic treatment of women and lack of diversity. VS was a store for women that was run for men. If it took #metoo and woke thinking to fix it then I am okay with that. Because it needed to be fixed.
Watch “Victoria’s Secret: Angels and Demons”, a documentary that details all that was wrong with VS. Thankfully, it’s getting better.
I agree, George. Victoria’s Secret has suffered a huge loss of market share over the past 10 years. A lot of that share has gone to retailers like Aerie, which has a much more body-positive image and is more inclusive. Women are the ones walking away – they’re the customers, so it really doesn’t matter what men think of that!
“Woke” is the past tense of to become awake.
Imagine! A female retailer with an impressive background heading a clothing chain for woman. You don’t see that every day.
Given Ms. Super’s background and experience, she can definitely make a positive impact on the business, but she’ll need to narrow the focus to its core brand promise. If she moves in an ‘all inclusive’ manner, broadening the aperture to be everything to everyone, the company will continue to flounder. VS has a niche, has tremendous brand equity and can once again become the ‘go-to’ for women’s intimates. She’ll need to delve deep into product innovation and speed up the logistical supply chain to get new arrivals on the floor faster than competing brands. VS associates, shoppers and investors should be excited about her new role. I’m certainly rooting for her.
Too skinny supermodels arriving in a soft porn version of a mail catalogue is a business model that has seen its day. The new CEO will no doubt improve things however the 80’s were a long time ago and this brand has pretty much run its course.
Bravo on the “surprise” selection of Ms. Hilary Super to lead and guide the next chapter of VS&CO! Having a female CEO lead a significant brand dedicated to women is refreshing and long overdue.
The brand must continue to distance itself from its misogynistic history and promotion of unrealistic beauty standards. Sure, selections need to fit and flatter the different body shapes, but with Ms. Super at the helm, she needs to keep those fabled angel wings locked away while communicating what the brand stands for. It should not be a return to objectification and catering to the male gaze or faking a cultural change.
The bottom line is that the transformative CEO role, in this case, requires both a merchant and a marketing lens to create relevant products and ranges and an authentic brand value proposition that resonates with women. Will Ms. Super have sufficient runway and proper support from the VSCO board to see through this transformation? Time will tell.
Building a brand position is tough. Re-building a brand position is tougher.
How many women are saying, “Ick! Victoria’s Secret? Why would I go there?”
Don’t blame “wokeness” for Victoria’s Secret’s problems. The brand became one-note (fixated on the body image celebrated in its “fashion shows”); it missed not only the trend toward more inclusive shapes and sizes, but also the migration of the intimates business toward fitness retailers. Consumer behavior has changed, driven by sport bras and “innerwear as streetwear,” and VS missed the evolution.
If a new “merchant CEO” can continue down the path of a balanced assortment — while recognizing the decline of the regional mall at the same time — more power to her.
I merchandised Intimates at Kohl’s from 1992 to 2006. At the time, everyone was chasing Victoria’s Secret (and by “everyone,” I mean Kohl’s, JCP, Macy’s and so forth). There was a void in the kind of color and pizzazz that younger shoppers were finding at VS, given department stores’ largely utilitarian branded assortments. (With the exception of Wonderbra.) Victoria’s Secret was a game-changer, but 20-30 years ago is a long time, given the evolution in demographics and lifestyle affecting the Intimates business since then.
May be on an island of my own here, but I do think there is opportunity to reintroduce some direct mail marketing into the mix. Enough to drive some traffic to the website and stores to refresh the brand statement to those that have jeweled bras and angel wings as a last impression and introduce to a group who has no real impression of this business. With a merchant at the helm, a reinvigorated vision can be fully crafted and a message shared.
I am optimistic that Ms. Super will have a very positive impact at Victoria’s Secret. Trend-driven categories, like intimate apparel, demand merchandising expertise, and Ms. Super brings strong experience to this role. She does have her work cut out for her, and the challenges the company is facing are significant. There are logistics issues, real estate, and product development all need attention to brush the dust off the brand.
On a personal note, always nice to see a mervyns’ alum in the news.
She has the experience in the execution as the CEO, what she needs is a designer/architect for the brand to drive the vision to revive it like Zac Posen hire for the Gap. You combine the execution and the vision and you can revive the relevance
In my opinion, Hillary Super is a smart hire for Victoria’s Secret, given her experience in turning around brands like Anthropologie and Savage X Fenty. However, a CEO alone isn’t enough to fix all issues. Victoria’s Secret needs to focus on truly understanding and responding to current consumer preferences, especially around inclusivity and comfort.
Expanding their product range to reflect these values and investing in digital channels is crucial. They also need to improve their brand image, which still suffers from past controversies. A real commitment to change, not just surface adjustments, will be key to regaining relevance.