Can a New Frederick’s Squeeze Back Into Top?
Frederick’s of Hollywood wants to be naughty and nice.
But will it be successful?
The legendary company that introduced black lingerie to America and pioneered push-up bras is set to emerge from bankruptcy protection today. But while the 56-year-old retailer spent the last couple of years courting investors, closing stores and sharpening its focus, the lingerie market got crowded.
The $10-billion market is teeming with competitors, which have honed to a fine art Frederick’s once-innovative recipe of mixing sex with a touch of sleaze.
So while clinging to its storied heritage, Frederick’s is trying to set itself apart and appeal to a new generation of customers who might have a need for a French maid costume or a feather-trimmed teddy, garments that could not be found at rival Victoria’s Secret.
Yet squaring off against Victoria’s Secret, a unit of Columbus, Ohio-based Limited Brands Inc., won’t be easy. As Frederick’s has struggled through tough financial times, Victoria’s Secret has made sexy lingerie as mainstream as cotton underwear. A Victoria’s Secret fashion show, featuring scantily clad models, aired recently on prime-time television.
Victoria’s Secret “has become very much the standard in the minds of the consumer,” said Dorothy Lakner, an analyst with CIBC World Markets.
Executives at Victoria’s Secret could not be reached for comment Tuesday about Frederick’s plans.
Department stores these days also offer a wide range of sleepwear and intimate apparel, as do discounters such as Target Corp. and Wal-Mart Stores Inc. Specialty retailers such as San Francisco-based Gap Inc. and Abercrombie & Fitch Co. have gone after the young lingerie shopper as well.
Reintroducing itself to younger consumers just in time for the holidays -- and just in time to battle Victoria’s Secret’s own high-profile “Sexy Christmas” advertising campaign -- Frederick’s last month launched a “Tease the Season” ad blitz, erecting billboards and bus placards throughout Southern California.
Next spring, the retailer will have 11 of its products featured in Seventeen magazine’s “prom special” edition.
“We’re not trying to go after young teens; we’re trying to go after young women. Young, single, happening, hip women,” Chief Executive Linda LoRe said.
But whether Frederick’s will manage to buff an image considered by some to be more tawdry than hip remains to be seen.
Frederick’s has shuttered 44 stores and opened seven since filing for bankruptcy protection in July 2000. Currently, it operates 177 stores nationwide and has 1,325 employees. LoRe said the retailer plans to open an undisclosed number of new locations next year.
Frederick’s also has been refurbishing stores, including the one at the Glendale Galleria, with red velvet curtains and leopard-print carpeting. The idea, LoRe said, is to give each outlet a “boudoir feeling.”
Over the next couple of years, Frederick’s will “touch up” every store in its chain, LoRe added, including the flagship store on Hollywood Boulevard, which got its last face-lift 20 years ago.
Still, the changes will go only so far. “We did not abandon our heritage,” LoRe said. “We don’t do flannel.”
But Victoria’s Secret does -- and that could be a problem for Frederick’s, industry insiders say, because young women want snuggly as well as sexy.
“Women don’t necessarily wear the sexier items every single day of the week,” analyst Lakner said. “There’s cotton underwear and comfort to be taken into consideration.”
Comfort, though, didn’t seem to be foremost on customers’ minds Tuesday at the Frederick’s store at The Block at Orange.
On display were red Santa teddies and see-through nighties trimmed with marabou feathers and a “holiday” French maid costume, also in scarlet.
Shoppers said they liked the ultra-sexy products -- and the low prices.
Though a rack in a back corner included cotton pajamas and five no-nonsense terry-cloth robes, most of the apparel was sex-tinged, including skimpy nighties, thong underwear and padded or water-filled bras.
A hot seller: a red and black “cherry blossom” corset for $48.
The “Boudoir Cafe” features an “edibles” section, where his-and-her undies go for $7 each.
Frederick’s was founded in 1946 by Fred Mellinger, who was inspired by a World War II pinup of a scantily clad Betty Grable. A year later, Frederick’s moved to Los Angeles from New York. The company expanded into mail-order catalogs and opened mall stores, but its name was somewhat smudged because it sold sex toys along with undergarments. The company has since backed off the erotic paraphernalia to focus on lingerie.
Frederick’s endured a variety of struggles through the late 1990s, when it churned through four chief financial officers. It filed for bankruptcy protection two years ago, weighed down by slipping sales and $55 million in debt. Of that, $14 million remains on the firm’s books and is being replaced with two notes to be repaid over the next six years, a spokeswoman said.
The company now is owned by a group led by Credit Agricole Indosuez, a French bank.
As of last month, Frederick’s same-store sales were up about 6%, a better record than at many other specialty retailers.
“What you have here is a senior management team and their staff who are focused on the future,” said LoRe, who took over six months before the bankruptcy filing. “We learn what we do wrong and move on.”
