Victoria's Secret storefront

Leslie Wexner has spoken

And the founder, chairman and chief executive officer of L Brands Inc., parent company to Victoria’s Secret, didn’t shy away from his feelings about disgraced financier and former confidant Jeffrey Epstein. 

“Being taken advantage of by someone who was so sick, so cunning, so depraved, is something I’m embarrassed I was even close to,” Wexner told analysts at the company’s investor day in Columbus, Ohio, Tuesday. “But that is the past.” 

“In the present, everyone has to feel enormous regret for the advantage that was taken of so many young women,” Wexner said. “We are all betrayed by friends. At the end of the day, people have secret lives because…they’re so good at hiding those secrets.”

L Brands’ Les Wexner Claims Jeffrey Epstein Embezzled Over $46 Million

Les Wexner and Jeffrey Epstein.  REX/Shutterstock

Wexner was referring to his ties with the late Epstein, the convicted sex offender who handled his money for years. 

After the New York financier was arrested on July 6 on charges of sex trafficking, Wexner made clear he cut ties with Epstein years ago and L Brands hired a law firm to look into any possible ties the company had with Epstein. But details quickly emerged about the ceo’s relationship with Epstein, who was once a trustee of the Wexner Foundation and was given sweeping powers to control Wexner’s fortune. 

Epstein died of an apparent suicide in his jail cell on Aug. 10 and the questions around his link to Wexner continue. 

Rumors swirled that Epstein used his connection to the lingerie brand to seduce young women, many of them aspiring to be one of the brand’s famed Angels.

Meanwhile, sales in Victoria’s Secret’s core lingerie business have continued to dwindle. And shares of L Brands, which also owns Bath & Body Works and Pink, have fallen by approximately 37 percent year-over-year. Almost all of the company’s revenue growth in the last year has come from the Bath & Body Works business. 

But that’s not the only way Victoria’s Secret has fallen out of favor. 

The seemingly perfect Angels stand in stark contrast with the movement toward body positivity and inclusiveness. Former L Brands chief marketing officer Ed Razek’s comments last fall that the annual Fashion Show was “a fantasy” and that no one had any interest in plus-size or transgendered models didn’t do much to help. 

A Victoria’s Secret Angel.  Shutterstock /

“Victoria’s Secret has failed to evolve with the times and, as a result, its brand is losing touch with its customers,” wrote James Mitarotonda, chairman, president and chief executive officer of activist investor Barington Capital Group, in a letter to Wexner this spring. He added that the brand is “outdated and even a bit tone deaf.” Barington now serves as a special adviser to the company, which has also revamped its board.  

But John Mehas, who took over as ceo of Victoria’s Secret earlier this year, told the analysts in Columbus that the lingerie giant is refreshing the brand, which includes its marketing strategy. 

“The feedback we get from the social channels, from Metoo, we’re going to respond to that,” Mehas said. “There’s a big belief in the company that we need to evolve. I think you’re going to see that over the next few months. We’ve made some progress, but there’s more to come.” 

He added that those changes include “reevaluating” the annual Fashion Show. Just what that means is unclear. 

Wexner’s intentions to “rethink” the fashion show first surfaced in May.  

“Fashion is a business of change,” Wexner said at the time. “We must evolve and change to grow…Going forward, we don’t believe network television is the right fit.” 

Some speculated that the show would be moved to a streaming service. Victoria’s Secret alum Devon Windsor, who has walked in six Victoria’s Secret Fashion Shows, told WWD that she is still in the dark.  

2016 victoria secret fashion show Lily Donaldson Devon Windsor

Devon Windsor’s backstage glam.  James Gourley/REX/Shutterstock

“They haven’t told us anything,” said Windsor while at the launch party for Japanese men’s underwear brand Toot in Manhattan last week. She added that in the past, she had already begun training for the fall show by this time. “We have been finding things out with the media,” Windsor said.  

While executives didn’t comment on the fate of the Fashion Show during the Investor Day, Mehas said focusing on Victoria’s Secret’s core lingerie business, both online and in stores, will be a key growth initiative. 

“Looking at where the business is today, we lost our focus, at best, at bras, our core lines and competency,” Mehas said. “The product was not fashion-forward and it was heavily penetrated in basics. There was a lack of innovation.” 

Consumers simply refused to pay full price for the looks, he said. 

Wexner added that markdowns, which are caused from having the wrong products, are the largest expense the company has — larger than even the current threat of tariffs. 

“Whenever the markdowns go up, we’re not on our game,” the chairman said.

But he said it’s better to cut price when the merchandise doesn’t connect.

“It’s very easy, when the business isn’t what you want it to be, to postpone markdowns,” Wexner said. “But that’s the dumbest thing to do.”

He said his team is currently “scrubbing the inventory,” which includes promotional sales to bring in new merchandise.

But one thing the new merchandise will not include, however, is swimwear in stores. The category was reintroduced online in March after a three-year hiatus. Mehas said bringing swimwear back to stores — rather than focusing on the core lingerie line — would be “a distraction.”

Victoria's Secret store

A Victoria’s Secret store.  Shutterstock / Brookgardener

Other growth strategies include managing the company’s massive real estate portfolio. There are currently 1,143 Victoria’s Secret stores, according to the company’s web site. Some speculate that the store count is too large as consumers continue to shop online.  

But Stuart Burgdoerfer, chief financial officer and executive vice president of L Brands, said 99 percent of the company’s store fleet is “cash-flow positive.” 

“Why would you close a store that generates cash flow?” Burgdoerfer said. And while new stores continue to open internationally, in places such as Paris and Saudi Arabia, he said China has the largest growth potential. 

In addition, Victoria’s Secret sister brand Pink, which favors a 14- to 20-year-old demographic, is on track to become a $1 billion business by 2022, according to Amy Hauk, ceo of Pink.  

“Pink’s role is to introduce the girl to VS and create loyalty,” said Hauk, who said Pink draws its strength from the sport and “Swim-to-Gym” categories. “As she graduates from college, I then hand them to John [Mehas].” 

The other question left unanswered is, Who will L Brands be passed off to after Wexner — who turned 82 on Sunday — retires? L Brands has not publicly laid out plans for his successor. Industry insiders say Mehas isn’t seasoned enough to take over the entire operation, having been with the company less than a year. That leaves few options internally. The new person would likely need to have experience with corporate turnarounds. 

But Wexner doesn’t seem to be worried. 

“I’ve had the pleasure in my life to work with a lot of capable people. And unfortunately, a few not so capable people,” Wexner said. “The team that leads the business now is absolutely the best team, most experienced, most supportive, easiest to partner with, most committed to be successful. And from my point of view, a critical factor, is that they’re teachable. And they’re great students and hopefully I can teach and improve their set of skills.”

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