Leslie H. Wexner had a legendary run, but in the end he just couldn’t keep up with the times.
Wexner, after “thoughtful examination” and pressures from the board and shareholders, is stepping down as chairman and chief executive officer of L Brands, which he founded 57 years ago and led through decades of meteoric growth and master brand building — until the last few years, which have been marred by faltering business at Victoria’s Secret and scandals ranging from involvement with a disgraced financier to allegations of sexual harassment at the lingerie brand.
To some degree, Wexner’s presence will still be felt. He will continue as chairman emeritus of L Brands and will remain its largest shareholder, controlling 47.7 million shares, or 17.4 percent of the company.
“Now is the right time to pass the reins to new leadership,” Wexner wrote Thursday in a reflective and nostalgic farewell letter to his associates.
“Over the course of nearly six decades, we’ve built this family business into a public company and have grown it into a global enterprise. Most of you know the story of our modest start — a $5,000 loan from my aunt. I look back with such gratitude for her generosity and faith, which started the journey of L Brands,” Wexner wrote. “I am also incredibly grateful for the dedication and hard work from all of you as well as the hundreds of thousands of other associates who have been vital to the success of our company along with our loyal partners and customers, who have elevated us and supported us over the years.
“Today feels very similar to the day that my aunt offered me a new start. Today is the beginning of an important new chapter in the evolution of the enterprise.”
It’s hard to perceive of L Brands without Wexner front and center. He’s been hands-on and passionately engaged in the business and the brands he nurtured, though in his letter, he seemed to accept his fate.
“As I’ve said before, retail is a business of change…and we have seen our business evolve and take new paths many times before…always with a view to creating new possibilities for the future,” Wexner wrote. “Still, change is never entered into lightly, and the decision to take this action [the sale to Sycamore] comes after thorough and thoughtful examination by our board of the opportunities available to drive long-term value for associates, partners and shareholders.”
Wexner praised the $5 billion Bath & Body Works chain for its “consistent track record of delivering strong results” and said the transaction with Sycamore, which positions Bath & Body Works as a stand-alone public company, will “sharpen its focus and invest in its strong momentum to generate stable earnings and fuel greater growth.” Bath & Body Works ceo Nick Coe becomes vice chairman and chief operating officer Andrew Meslow becomes ceo. “This structure allows Nick to focus more intently on the strategic position of the business, the evolution of the brand, product development and new ventures,” Wexner said.
Regarding the $7 billion VS, Wexner said, “We all know the past few years have been challenging for Victoria’s Secret Lingerie and Pink, and we have said that ‘everything is on the table.’ We believe partnering with Sycamore is the best way to return the Victoria’s Secret businesses to historic levels of profitability.”
Wexner’s last four years running L Brands were marred by the declining performance of Victoria’s Secret. While it’s still the dominant player in lingerie, its sexy imagery, perfect body portrayals and flashy fashion shows became antiquated in the age of the #MeToo movement and inclusiveness. Emerging players in the sector, such as Aerie, owned by American Eagle, and the Walmart-owned Eloquii for large-size lingerie, started chipping away at VS sales, as did other pure-play and more inclusive brands such as Third Love.
Most damaging to the reputation of Wexner and his business was his association with financier Jeffrey Epstein, who killed himself in the Metropolitan Correctional Center in Manhattan last August after being charged with being a pedophile and attacking women. Wexner did publicly apologize for his association with Epstein, who managed money for Wexner and allegedly attacked a woman in a hotel room after claiming to be a talent scout for Victoria’s Secret.
Wexner said he was embarrassed about his connections to Epstein and accused him of misappropriating more than $46 million while serving as his money manager. Wexner also said he severed ties with Epstein 12 years before his death. But it is believed that Epstein flourished financially due to Wexner. In his apology, which came in the form of a letter to board members of the Wexner Foundation, Wexner wrote that the thievery was “frankly, a tremendous shock, even though it clearly pales in comparison to the unthinkable allegations against [Epstein] now.”
Despite Wexner’s recent difficulties, the accomplishments of the 82-year-old retail tycoon can’t be diminished. Wexner was a master at seeing “the white spaces” in the market, developing businesses that filled those voids and positioning them for aggressive national growth. He has been considered by many to be the father of modern apparel specialty retailing, though he credited the late Milton Petrie of the former Petrie Stores with significantly influencing his path to brand building, and thought of the late Sam Walton as his best friend in the industry. Until Thursday, Wexner was the longest standing ceo of a Fortune 500 corporation.
Through invention and acquisitions, Wexner built a retail conglomerate that went well beyond Victoria’s Secret, Pink and Bath & Body Works years. During different stages of its history, the business also encompassed The Limited, Express, Lane Bryant, Abercrombie & Fitch, Lerner, La Senza, Cacique, Galyan’s, Penhaligon’s, The Limited Too (now Tween Brands Inc.) and Henri Bendel. His company’s purchase in 1978 of Mast Industries, a major supplier, was critical in speeding orders and reorders to Wexner’s stores so they were often first with the fashion trends, and in developing private brand merchandise such as Forenza, which was sourced out of China, but with its Italian aura became a best-seller.
Wexner’s first experience in fashion was working in his parents’ clothing store, Leslie’s, in Columbus, Ohio. As the story goes, while his parents were on vacation, the young Wexner analyzed the margins on the women’s clothing they sold and determined that selling more lower-priced items rather than fewer higher-priced items would lead to better profits. Wexner tried to get his father to change the inventory mix but to no avail. So in 1963, he borrowed $5,000 from his aunt to start his own fashion store in the Kingsdale Shopping Center in upper Arlington, Ohio, a suburb of Columbus. He called it The Limited to reflect the limited amount of merchandise and emphasis on key items. First-year sales for the store were $160,000. Eventually, Wexner’s store brought higher turns and revenues than his parents’ — and they saw the light and soon closed their store to join their son’s business.
In the years that followed, he expanded his business portfolio, becoming a dominant U.S. retailer through brand extensions and an open attitude to purchasing other brands. Under his leadership, L Brands evolved from an apparel-based domestic specialty retailer to a $13.2 billion international company with more than 80,000 associates focused on lingerie, beauty and personal-care product categories.
His success came from a sort of merchant intuition, which he once said in a WWD interview comes from “really being in touch with the customer. It’s what you have to do. It isn’t just visiting stores. It begins with curiosity about the customer, anticipating what she will buy.…You have to know them like you know your friends.”
Limited Brands went public in 1969, and through most of its history made a lot of money for shareholders. While Wall Street analysts have at times been critical of the business, many believe that Wexner deserves more credit for maintaining the profitability, leading a team that orchestrated several financial re-engineerings, and for deftly and presciently darting in and out of the turbulent fashion market — from buying Victoria’s Secret in 1982 when its sales were barely more than $5 million to ditching most of his company’s apparel business in 2007, in a surprising move recognizing how consumers would be turning away from fashion to spend elsewhere. He simplified the operations to focus on lingerie and Bath & Body Works. Yet many were similarly stunned when in 2016 he decided to drop swimwear from the Victoria’s Secret assortment. He canceled the Victoria’s Secret show in 2019.
Wexner had long referred affectionately to Victoria’s Secret as “Vicky.” The brand was created by Roy Raymond, who thought up the idea in 1977 in Palo Alto, Calif. Raymond picked the name because he wanted the label to evoke the Victorian era image, with old English imagery.
In 2007, when he abandoned women’s apparel, the very category that made him a billionaire, Wexner expressed no regrets about it. “Happily,” Wexner said at an investors’ meeting, “we are not in apparel specialty retailing. That was a concern for many of you and us for many years. I am delighted we don’t have apparel retailing stores and that we are as dominant and significant in the categories we are in. Brand loyalty to beauty and lingerie is very different than loyalty to apparel. Because of that loyalty, we get trial and repeat [business] in a way that apparel does not get. It’s a very different pattern of purchasing behavior.”
The irony is that although Wexner’s empire embraced a culture of misogyny, according to recent media revelations, Wexner himself was instrumental in enabling women to break through the glass ceiling. Known as “Les” and revered among his ranks, he had a track record of promoting women to the top rungs of his divisions, recognizing their talent, and letting them run with the businesses, though some thought he just preferred to have women rather than men reporting to him and that he wasn’t particularly motivated by political correctness.
In any case, he was responsible for the rise of several female executives, among them Grace Nichols, who ran Victoria’s Secret Stores; Cindy Fedus-Fields, who ran Victoria’s Secret Catalogue, and Sharen Jester Turney, who for years oversaw both sides of the lingerie business. There was also Robin Burns, who for seven years ran Limited’s Intimate Beauty Corp. and Victoria’s Secret Beauty who already had a reputation with Calvin Klein Beauty, and Beth Pritchard, who ran Bath & Body Works for several years. These women presided over their respective businesses during heady growth periods.
Brilliant, philanthropic and enigmatic, Wexner generally stayed aloof from industry trade organizations and black-tie events and was rarely seen in public outside of Columbus, where L Brands is based, aside from touring his stores around the country, or seated in the front row of the annual Victoria’s Secret fashion show. On occasion he could be spotted in key flagship stores days before their openings, taking pictures on his own and insisting on last-minute changes. He developed a unique corporate culture in Columbus — some would label it intrusive with an “on-boarding” experience for new recruits that touched many aspects of their lives, both in and out of the office.
He was only occasionally interviewed, though when he was, he was thoughtful, and adept with the soundbite — and the retail, fashion and financial communities paid attention. He could be provocative, and prone to proclaiming the billion-dollar potential of his different brands in their infancies.
He said department stores were ultimately doomed. “The department stores’ traffic problem isn’t because of the mall,” he once told WWD. “The mall’s traffic problem is because of the department stores.…In most shopping centers today, probably the biggest traffic drivers would be Victoria, Pink, Bath & Body, maybe Sephora and Apple,” Wexner said. Yet he subsequently changed his tune, acknowledging that department stores weren’t going away, only transforming to formats like Target and Kohl’s that were overshadowing traditional formats. He also acknowledged that his specialty businesses, while prominent in malls and fashion corridors nationwide, “didn’t put a dent” into the department store business.
Like other merchant princes of years past, Wexner has been a showman, staging the splashy Victoria’s Secret fashion shows featuring “Angel” models encumbered by huge feathery wings. His annual meetings in Columbus through the Eighties were more like big corporate cheer-leading sessions, attended by hundreds of employees, shareholders, media and Wall Street analysts. In later, less robust times, Wexner toned down the events and gave less access to the press.
Wexner simply referred to himself as “a shopkeeper” and humbly portrayed his groundbreaking achievements as being spawned by a simple albeit desperate need for survival. Upon opening his first store, “The summary of my life’s ambition was, ‘Don’t go broke,’” he once admitted during a WWD interview. “I didn’t sleep for weeks. I developed stomach ulcers because I just didn’t want to go broke. I don’t know if I wanted to be a success, but I really didn’t want to go broke.”