THE NEW YORK TIMES INTERNATIONAL EDITION MONDAY, SEPTEMBER 9, 2019| 11
businessA new catalog from Victoria’s Secret
landed in mailboxes last month, igniting
a flurry of texts and emails among for-
mer executives.
The words “Bond Street London” had
been added below the familiar font of the
company’s name at the top of the cover,
and the black-and-white photos of mod-
els appeared less salacious than usual.
It seemed to many like a return to the
lingerie giant’s early heyday, when it
was guided by the tastes of a fictional
British woman named Victoria and its
catalogs featured a London address,
even though the company was based in
Columbus, Ohio.
The mailing “really shows a finer lev-
el of refinement and sophistication than
the brand may have been pursuing in
the recent past,” said Cynthia Fedus-
Fields, a former executive who oversaw
Victoria’s Secret’s enormous direct busi-
ness, including its catalog, from the
mid-1980s until 2000. “What goes
around comes around.”
But it will take more than a catalog re-
boot for Victoria’s Secret to return to its
previous heights. Shares of L Brands, its
parent company, have cratered since
2015; sales at stores have dropped; and
the brand has been forced to reckon with
shifting consumer tastes, executive
turnover and new competition. The im-
age of lingerie-clad supermodels walk-
ing runways in stilettos and angel wings
— a marketing idea that Victoria’s Se-
cret turned into a prime-time television
hit — now seems positively retrograde.
The brand is in the early stages of a
much-anticipated overhaul, which it
plans to detail for investors and analysts
at a meeting this week. These efforts are
unfolding at a fraught moment for L
Brands and its longtime chief executive,
Leslie H. Wexner, who has come under
intense scrutiny for employing Jeffrey
Epstein as a close personal adviser for
more than a decade and handing him
sweeping powers over his finances, phi-
lanthropy and private life.
Mr. Wexner, an 82-year-old billionaire
who helped shape the American shop-
ping mall through chains like the Lim-
ited and Abercrombie & Fitch, has
sought to distance himself from Mr. Ep-
stein since Mr. Epstein was arrested in
July and charged with sex trafficking in-
volving girls as young as 14, saying he
had no knowledge of the alleged activi-
ties. But revelations of how Mr. Epstein
used his link to Victoria’s Secret to prey
on women have made the relationship
impossible to ignore.
Even before the Epstein scandal, the
company was fielding criticism this
year from an activist investor and one of
its own models over its portrayal of
women. This latest issue has high-
lighted L Brands’ deep reliance on Mr.
Wexner, its founder and chairman and
the longest-serving chief executive in
the S&P 500.
He has not signaled interest in step-
ping back from the business or designat-
ed an heir apparent, even after L Brands
said in July that it had hired lawyers at
the direction of its board “to conduct a
thorough review” into Mr. Wexner’s re-
lationship with Mr. Epstein. Tammy
Roberts Myers, a spokeswoman for L
Brands, declined to comment on the in-
vestigation and any succession plans.
“Those issues have been there all
along — it’s just that they’ve been large-
ly out of focus until this whole mess oc-
curred,” said Peter Fader, a professor of
marketing at the Wharton School of the
University of Pennsylvania. “The Ep-
stein issue simply shines a bright light
on bad corporate infrastructure and
governance.”
Mr. Wexner said that the financier
had “misappropriated vast sums of
money” from him and his family, which
was discovered in 2007 when the two
parted ways. Mr. Epstein died last
month in what authorities said was an
apparent suicide.
The New York Times reported in July
that two senior L Brands executives
learned in the mid-1990s that Mr. Ep-
stein was trying to pitch himself as a re-
cruiter for Victoria’s Secret models and
that Mr. Wexner was alerted to the in-
appropriate behavior. Around the same
time, a model said, Mr. Epstein lured her
to his hotel room under the pretense of
being a Victoria’s Secret talent scout and
then attacked her.
The executives, who spoke on the con-
dition of anonymity, citing nondisclo-
sure agreements, said they had not been
contacted as part of the investigation,
which is being conducted by Davis Polk
& Wardwell, a prominent law firm with
deep connections to L Brands. Mr. Wex-
ner’s wife, Abigail, once worked there as
an associate, and his financial adviser is
a former partner.
Mr. Wexner bought Victoria’s Secret
for $1 million in 1982. He transformed it
into a global powerhouse that defined
many Americans’ perceptions of female
sexiness. For years, Victoria’s Secret
and its catalogs sought to convey a high-
minded British sensibility. The “English
heritage of the brand” was “totally
made-up but effective,” said Ms. Fedus-
Fields, who oversaw the growth of the
direct business to almost $1 billion in an-
nual revenue.
The brand’s guiding light in those
days was a fictional woman named Vic-
toria who had been raised in England by
a successful London businessman and a
French mother. She was well educated
and married to a barrister. Company de-
cisions were often made by asking,
“Would Victoria do this?” By the time
Ms. Fedus-Fields left in 2000, she said,
the English aesthetic was fading and the
brand was becoming “much more bla-
tantly sexy.”
Victoria’s Secret kept soaring as it in-
troduced new brands like the more
youthful Pink and created an annual
spectacle around its televised fashion
show.
Shares of L Brands hit a peak of
around $100 in November 2015. Vic-
toria’s Secret stock has since dropped
more than 80 percent.
The brand has been criticized for be-
ing out of touch with women and mod-
ern beauty ideals. Its models, critics say,
are too unrealistic, airbrushed and
dressed up for men rather than women
themselves.In March, the Barington Capital
Group, an activist investor, wrote that
Victoria’s Secret had “failed to evolve
with the times.” Barington questioned
the independence of L Brands’ board,
noting that through the Columbus com-
munity and Ohio State University many
directors had strong ties to Mr. Wexner
and Ms. Wexner, who is also a director.
The Wexners are the university’s larg-
est individual donors.The company reached an agreement
with Barington in April that made the
firm a special adviser. L Brands now has
five women on its 12-member board; it
previously had three.
The model Karlie Kloss recently said
that she had stopped working with Vic-
toria’s Secret because it did not convey
“the kind of message I want to send to
young women around the world about
what it means to be beautiful.”“There was a supermodel moment
with a lot of aspirations around those
women in general that seemed to be
beautiful and having the time of their
lives,” said Leslee King, founder of Re-
tailRepublik, who was an executive at
Victoria’s Secret for more than a decade.
“But as the millennial rose, it started to
become dated. She just wasn’t having
someone tell her what you should look
and feel like, and unattainable projec-tions of beauty became not just dated
and uncool but offensive.”
Victoria’s Secret was skewered in No-
vember after Edward Razek, then the
marketing chief of L Brands, said he had
no interest in casting plus-size or trans-
gender models in the fashion show, “be-
cause the show is a fantasy.” Mr. Razek,
who later apologized, abruptly retired
last month after more than three dec-
ades. He was a confidant of Mr. Wex-
ner’s and integral to the rise of the
brand’s models, known as Angels. That
same day, Victoria’s Secret made head-
lines for casting an openly transgender
woman in a catalog for the first time.
For all its struggles, Victoria’s Secret
remains one of the biggest mall stores. It
had $7.4 billion in sales last year in the
United States and Canada, more than
the Gap brand makes worldwide. But it
has been running a dizzying array of
promotions, which have eaten into its
operating margins. Sales at stores have
declined, and closings have accelerated.
Victoria’s Secret has been ceding
market share to a number of small com-
petitors that are “chipping away” at the
business, said Jamie Merriman, a retail
analyst at Bernstein Research. The
brand’s share of the United States wom-
en’s underwear market, which includes
bras and lingerie, dropped to 25 percent
last year from 34 percent in 2016, ac-
cording to Euromonitor International, a
market research provider.
The messages from newer lingerie
companies about body diversity, unedit-
ed images, self-love and comfort have
also had an outsize effect on consumer
attitudes and behavior.
Aerie, a popular American Eagle
chain, has curtains over the mirrors in
fitting rooms that tell shoppers to love
themselves before looking, said Jennifer
M. Foyle, its global brand president. Ae-
rie regularly shares photos of its
customers in store windows and took a
stand against airbrushing models sev-
eral years ago.
“The mood has changed out there,”
Ms. Foyle said. “Women are getting
stronger every day, and we’re not here
to please other people.”
Since November, L Brands has re-
peatedly said that “everything is on the
table” as it takes a hard look at the busi-
ness. In May, Mr. Wexner said that the
fashion show, after years of declining
viewership, would no longer be shown
on network television.
John Mehas, who became the head of
Victoria’s Secret’s lingerie division this
year, is expected to outline the brand’s
turnaround plans this week. The selec-
tion of a man for the role stunned some
former executives. Mr. Mehas, previ-
ously the president of Tory Burch, suc-
ceeded Jan Singer, a former Spanx exec-
utive. She joined in 2016 after the exit of
Sharen Jester Turney, the chief execu-
tive of Victoria’s Secret for a decade,
whom some had viewed as a potential
successor to Mr. Wexner.
The executive change highlighted
something that the headlines from the
past year — from Mr. Razek’s comments
to the details about Mr. Epstein — also
put a spotlight on: how many men are in
charge at Victoria’s Secret.Michael Corkery and Emily Steel con-
tributed reporting.Search for an image more in tune with the times
PHOTO ILLUSTRATION BY JOHANNA GOODMANOverhaul is anticipated
as Victoria’s Secret tumbles
from marketing heights
BY SAPNA MAHESHWARI
A crane recently lifted away the enor-
mous VW logo that sat like a giant hood
ornament atop Volkswagen’s 14-story
headquarters in Wolfsburg. Sometime
after dark on Monday, a crane will lower
an updated one into place.
The corporate face-lift to one of the
world’s most recognizable trademarks
is part of a push by Volkswagen toward a
new era of emission-free vehicles. With
a new, cleaner logo, the company is ea-
ger to turn the page on a diesel emis-
sions scandal that has cost it billions of
dollars, damaged its reputation and sent
executives to prison. The scandal, in
fact, hastened the company’s electric
ambitions.
At the Frankfurt International Motor
Show on Tuesday, VW will unveil its all-
electric ID.3, the first of a planned lineup
of affordable, mass-produced electric
vehicles. Volkswagen hopes to sell one
million a year by 2025. The company’s
Porsche unit will also debut its first all-
electric vehicle at the show, the Taycan
sedan.
“It is hard to overstate how important
both these cars are for their respective
manufacturers,” Tim Urquhart, an auto
industry analyst at IHS Markit, said in a
report ahead of the Frankfurt show.
“VW needs the ID.3 to present a compel-
ling choice for buyers that would never
before have even considered buying an
E.V., a true electric people’s car.”
To date, Volkswagen has lagged be-
hind competitors like Renault, Nissan
and General Motors in electric vehicles.
But Volkswagen executives argue that
the company is now going all in on elec-
tric and doing something none of its ri-
vals have been able to achieve: sell a
full-featured battery-powered car at a
price that can compete with cars that
run on fossil fuels.
Instead of a niche product that ap-
peals mostly to wealthy, environmen-
tally conscious buyers, Volkswagen ex-
ecutives said, the ID.3 is meant to be to
electric cars what the Beetle was in its
postwar heyday, the entree to a previ-
ously unattainable form of mobility.
The stakes are high as Volkswagen re-
mains under scrutiny four years after
the emissions scandal came to light.
Last week, a court-appointed monitor
issued an interim report that found no
breaches of Volkswagen’s agreements
with American officials. But the monitor,
Larry Thompson, a former deputyUnited States attorney general, recom-
mended that the company continue to
refine a program that allows employees
to report ethical or legal problems with-
out fear of reprisal.
The ID.3, the first Volkswagen-brand
car designed from the ground up to run
solely on batteries, is an implicit chal-
lenge to Tesla and other companies, like
Rivian or Dyson, whose backers hope to
dislodge the traditional carmakers.
Volkswagen is aiming to demonstrate
that the future ultimately belongs to
companies that know how to profitably
produce cars by the millions.
Executives at Volkswagen, which last
year edged out Toyota as the world’slargest carmaker, have hinted that econ-
omies of scale have allowed them to
push the cost of batteries in the ID.3 be-
low $100 per kilowatt hour. That price is
considered the point at which electric
cars become more affordable than inter-
nal combustion models. Analysts had
not expected costs to fall that far for sev-
eral more years.
Ralf Brandstätter, chief operating offi-
cer for the division that makes Volks-
wagen-brand cars, simply grinned
when asked about rumors that the com-
pany had achieved that magic number.
“We are the company that will pro-
vide electromobility for all,” Mr. Brand-
stätter said last month on the sidelinesof an event in Wolfsburg where the com-
pany gave reporters an advance look at
the ID.3.
Another executive, who declined to be
identified because the company had not
officially disclosed a figure, confirmed
that Volkswagen was paying less than
$100 per kilowatt hour for batteries.
The car, a four-door hatchback, will go
on sale this year in Europe, starting un-
der 30,000 euros, or $33,000, in the same
range as a well-equipped Volkswagen
Golf. That is about €20,000 less than a
Tesla Model 3 in Europe, but still about
€8,000 more than the starting price for a
Renault Zoe, an electric subcompact.
The ID.3 makes a flashier impression
than the Zoe and has features like a nav-
igation system that displays informa-
tion on the windshield, so drivers can
keep their eyes on the road.
Still, Volkswagen’s electric push is a
huge gamble. Sales of battery-powered
cars in Europe rose 84 percent in the
first half of the year, to 173,000, accord-
ing to JATO Dynamics but they account
for less than 2 percent of the total mar-
ket, and charging infrastructure re-
mains spotty.
Volkswagen plans to begin selling an
electric car in the United States at the
end of next year, but has not provided
details about price. Mr. Brandstätter in-
dicated that the model would probably
be a sport utility vehicle. Initially, Volks-
wagen will import the cars, but plans to
begin producing them at its factory in
Chattanooga, Tenn., in 2022.
As Mr. Brandstätter tells it, the ID.
traces its origins to a crisis meeting of
top VW executives in October 2015.
Only a few weeks earlier, the com-
pany had confessed to rigging diesel
cars to conceal illegally high emissions
from regulators. Martin Winterkorn, the
chief executive, had resigned. It was al-
ready clear that the scandal would lead
to huge fines and devastate Volks-
wagen’s image. The executives resolved
to develop what they call a Modular
Electrification Toolkit, a collection of
components that would serve as the ba-
sis for a range of electric models with
zero tailpipe emissions.For Volkswagen, the toolkit was a ma-
jor commitment to electric vehicles. The
company’s strategy has long been to
share as many parts as possible among
its car brands, which include Skoda,
SEAT, Bentley, Lamborghini and
Bugatti.
Designers and engineers for the
Volkswagen divisions draw on these
toolkits, also known as platforms, while
cultivating separate brand identities.
The strategy helps hold down costs and
exploits Volkswagen’s worldwide em-
pire of factories capable of churning out
more than 10 million cars a year.
The scandal was a catalyst. It takes at
least three years to develop a new mod-
ular toolkit. If the scandal hadn’t prod-
ded Volkswagen to start at the end of
2015, the company might not be in a po-
sition to mass-produce electric cars to-
day.
The decision to redesign the logo was,
from Volkswagen’s point of view, almost
as significant. Among other things,
Volkswagen will need to replace signs at
about 70,000 dealers worldwide.
The simple logo of a V hanging above
a W inside a circle is the latest iteration
of a basic idea that goes back to the
1930s. Volkswagen was then a Nazi
propaganda exercise, a “people’s car”
that would make automobiles affordable
for everyone.
The initial 1930s trademark was sur-
rounded by what looks like a whirling
swastika. The new trademark looks
very similar to one used in the
mid-1960s, when the Beetle was the
best-selling import in America.
The logo is two-dimensional, in con-
trast to the three-dimensional, metallic
look of the logo that, with some tweaks,
has been used since 1999. That logo did
not reproduce well online, where Volks-
wagen now does most of its marketing.
Klaus Bischoff, Volkswagen’s chief
designer, who designed the previous
logo, said it was out of date.
“When we came up with the new car,”
Mr. Bischoff said during an impromptu
interview in Wolfsburg last month, “we
said: ‘This doesn’t fit anymore. We need
something new.’”Volkswagen aims for electric car with appeal of the Beetle
WOLFSBURG, GERMANY
With fresh logo, carmaker
steps toward a new era of
emission-free vehicles
BY JACK EWING
Volkswagen’s ID.3, above, is the company’s first in a planned lineup of affordable, mass-produced electric vehicles.VOLKSWAGEN