THE ECONOMIST: Victoria’s Secret struggle bared. Can lingerie’s falling angel bring sexy back for investors?

At the world’s best-known lingerie brand, the dirty laundry is on full display. In an open letter to Victoria’s Secret published on June 16, Barington Capital, an activist investor, told Donna James, the brand’s chairwoman, that the company is failing its shareholders.

Hillary Super, chief executive since August, has not “gained the confidence of employees”.

Barington, which has a stake of just one per cent, is not the only activist circling the company. BBRC International, which has amassed more than a tenth of the underwear-seller’s shares, has denounced “disastrous” board decisions and demanded a change of leadership.

The brand’s management has dug in its heels, and is seeking to maintain control with a so-called poison pill: it will dilute the company’s shareholders if any of them acquires more than 15 per cent.

Yet the critics have a point. Over the past decade Victoria’s Secret has lost much of its sparkle. Sales last year were $US6.2 billion ($9.6b), down from a peak of $US7.8b in 2016. Its market value, at $US1.5b, has fallen by more than half since it was spun off from L Brands, its parent company, in 2021.

In the 2010s Victoria’s Secret, founded half a century ago as a place for men to buy underwear for their wives and girlfriends, became emblematic for its detractors of all that was wrong with the fashion industry.

In its heyday, millions watched pale, stick-thin, feather-clad models (or “angels”) flutter down the runway at its annual fashion show. Emboldened by the #MeToo movement, those same angels went on to recount unholy tales of starvation and abuse.

Viewership was already dwindling when in 2018 the show’s organiser told reporters he would never have a transgender model, or a fat one. He apologised. The event was cancelled the following year.

Since then, Victoria’s Secret has sought to redefine its image. Shops sell comfortable pyjamas as well as elaborate push-up bras. The fashion show returned last year, but now also features models who aren’t so skinny, pale or female.

Yet the makeover has not returned the company to growth. The activists hounding Victoria’s Secret argue that it should go back to what once made it sexy. Bring back the angels, writes Barington, and focus on bras. Ms Super, by contrast, wants to move into areas such as fitness.

Despite all its troubles, the company is still the world’s biggest seller of lingerie, helped by frequent promotions. “Victoria’s Secret is one of the best instances of a brand people supposedly don’t like and yet continue to buy,” points out Simeon Siegel of BMO Capital Markets, an investment bank.

Raising prices and forgoing lower-value shoppers, Mr Siegel suggests, could be a path back to success.

Most important for the company, however, is to decode the desires of younger consumers, whom Ms Super has made her priority.

Surveys suggest that Gen Z has less sex than preceding generations. But that does not mean it does not want to feel sexy, at least on occasion.

Sabrina Carpenter, a 26-year-old popstar, sported sparkly lingerie on her recent sell-out tour. Her mostly female fans joined in. Victoria’s Secret may yet find its stride again.