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Grace Nichols, who catapulted Victoria’s Secret stores into the nation’s dominant lingerie chain, has stepped down as president and chief executive officer.

Limited Brands Inc., parent of Victoria’s Secret, said Monday that Nichols will be replaced with a co-leadership structure. Lori Greeley, currently executive vice president and general merchandise manager of intimates, will become ceo of Victoria’s Secret Stores, while Mark Weikel, presently chief operating officer, has been named president and chief operating officer.

Nichols will move from Columbus, Ohio, where VS and Limited Brands are based, to New York, but isn’t completely departing Victoria’s Secret.

“A great deal of this decision is due to where I am in my personal life,” said Nichols, who turned 60 in December, in an exclusive interview. “I’ve been in Columbus for 20 years. My kids [two daughters] and husband are in New York, and I expressed a desire to move into an assignment which gets me closer to my family.

“I’m not leaving Limited Brands. I’ll be doing something to support the continued growth of the business on critical initiatives. The game plan is to really allow me to step into a series of special projects [involving Victoria’s Secret].” Her first task will be to support the growth of VS’s Intimissimi brand, Limited said.

Her “semiretirement,” as Nichols refers to her move, was expected. In May, when Limited Brands chairman and ceo Leslie H. Wexner revealed an overhaul of VS management, Nichols said she would continue for about a year and possibly take a different role. Wexner promoted Sharen Jester Turney to ceo of a newly formed Victoria’s Secret Group and named Jerry Stritzke as chief operating officer to better align all the VS divisions — stores, direct, beauty, Pink, Intimissimi and Sexy Sport — and strive to grow the brand to $10 billion in volume in five years.

On Monday, Limited Brands said Denise Landman has been named president of Pink. She is currently senior vice president and general merchandise manager of Pink.

Victoria’s Secret was founded in San Francisco in the early Seventies by Roy Raymond. Limited Brands bought the brand for $1 million in 1982 when VS had three stores and a small catalogue. Today, Victoria’s Secret is the top performer in the Limited Brands conglomerate. VS reported $4.2 billion in sales in 2005, including $3.2 billion generated by the stores, and is expected to have sales of about $4.5 billion for 2006. The brand captures roughly 15 to 20 percent of the lingerie market.

This story first appeared in the January 30, 2007 issue of WWD. Subscribe Today.

Asked if her departure was spurred by last spring’s management overhaul, Nichols replied: “I really needed to find something to put my career and personal life together in a more balanced fashion. I actually was so excited that the new megabrand structure was put in place and filled from within.”

She described her years at Victoria’s Secret as “fun and challenging in terms of the great opportunities to learn from Les [Wexner] and working in a business that has a lot of cash and an appetite to take risks.”

Nichols enjoyed a 20-year run at VS and a close association with Wexner. She maintained a low profile and cast a conservative, intellectual image, which could seem incongruous with running a business known for flaunting near-naked supermodels in its runway shows and catalogues. Prior to joining Victoria’s Secret, Nichols had a traditional retail background, working at the former Broadway and Weinstocks department stores.

Nevertheless, Wexner, who has a talent for spotting talent and sometimes makes unconventional hires, recruited Nichols to VS in 1986 as vice president and gmm. “Victoria’s Secret was my first foray into specialty retailing. I didn’t have any background in lingerie,” said Nichols. “My background was all fashion sportswear. There were 100 Victoria’s Secret stores. We did $100 million in sales, and we did not make any money. The average store was about 1,500 square feet and looked like a little European boutique. It was a very different business.”

Teamwork, brainstorming and some meetings that went well into the night helped her find the way. She recalled one such meeting in 1987. “I didn’t know anything about sleepwear, but we had a bunch of merchants around a room discussing what women sleep in. They said they slept in their husband’s or boyfriend’s undershirts. So we developed a knit nightshirt, called the Chelsea shirt, and sold a million units in 100 stores that year.”

A year later, Nichols rose to executive vice president and general merchandise manager, and in 1991, she became ceo.

Now, VS has more than 1,000 stores, ranging from 4,000 to 25,000 square feet, and the chain is internationally recognized. It’s considered a cash cow, and should report store sales of around $3.5 billion for last year. Larger prototypes that have store-within-a-store formats and run 10,000 to 15,000 square feet, compared with the current average of 5,000, are being developed. The new format includes shop-in-shops for Pink and Chantal Thomass and could one day include shop-in-shops for Intimissimi, an Italian lingerie brand geared toward younger customers seeking less-expensive, faster-turning products. The company also has stepped up efforts to secure third-party beauty brands to sell inside VS stores.

Discussing the formula for building VS into a power brand, Nichols cited several elements. She explained it was about utilizing innovation and technology to reinvent a category, particularly bras; getting close to shoppers and not viewing them as homogenous, and developing a “subbrand architecture” to appeal to customer segments and different tastes. The VS fashion spectrum ranges from the Very Sexy subbrand to the more romantic Angels and classic but modern Body by Victoria subbrands. The diversity in appeal, Nichols contended, “sets us apart from other specialty retailers. A lot of what we know about our customers comes from having the merchants in the stores.”

In the Nineties, Nichols and her team developed a strategy of bra launches, including the Miracle Bra and Second Skin Satin. “Those products have run their course, but we continue to stay focused on that strategy, right on up to the Secret Embrace line last year that drove a great deal of our growth.” She said the one-piece bra in 12 months did $300 million in volume.

Perhaps even more fundamental was perceiving the Victoria’s Secret business as lingerie, not underwear. “From day one, that’s been the differentiating point,” Nichols said. “Eighty to 90 percent of our customers are women buying for themselves. The fact that women wanted lingerie, not underwear, has really been the appeal. Underwear connotes basic and commodity — things you only buy when you need it and not when you want it. There’s a lot more market potential and margin in lingerie than underwear.”

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