Byline: David Moin

NEW YORK — Les Wexner defined the mission and his lieutenants laid out the program: Intimate Brands Inc. is “relentlessly” pushing change to sustain hefty volume growth. That means accelerated product innovation, upscaling the image through store renovations, adding a layer of prestige perfumes and higher prices, and finding and filling market voids — or “white space” in the vernacular of IBI.
“Brands that are successful have to move. Brands have to have agility and speed,” IBI chairman and chief operating officer Wexner stated Wednesday, at the $4.5 billion firm’s annual meeting for analysts at the Rainbow Room in Rockefeller Center.
“The future looks as promising as it did in the past.”
“We believe speed is one of our competitive edges,” Beth Pritchard, president and ceo of the Bath & Body Works division, told WWD after the meeting. “Speed to market with market-right products will exceed all competition. Over 50 percent of our volume came from products new to our business over the last 12 months. The industry average is 10 to 15 percent. “We do not see this decreasing.”
And Grace Nichols, president and ceo of Victoria’s Secret Stores, boasted in her speech, “Our business is changing at a lightning quick pace.”
The orchestrated message was bolstered by IBI’s September sales results released just before the meeting began, and one day ahead of when most chain’s post the month’s numbers. The sales were strong — ahead 10 percent on a comp-store basis for the five-week period ended Sept. 30. The IBI stock leaped 10 percent, or 2 points, closing at 22 on the NYSE Wednesday.
Year-to-date, same-store sales are ahead 9 percent, the company said. Sales in September rose 16 percent to $339.4 million.
But there’s some uncertainty about the near future. Wexner, when asked by WWD for his Christmas outlook, responded, “There are some wild cards.” The uncertainty stems from “fragilities in the world,” including the rising price of oil, the euro’s weakness, the presidential election, and rising conflicts in the Mideast again, Wexner said. “These could be mere distractions [to consumer spending] or substantial disruptions.”
With the U.S. economy in “the beginnings of a slowdown, it feels like a soft landing. “We’re feeling inflation on our domestic-made product and pressure in employment at all levels.” Addressing the divisions during his presentation, Wexner said that with the Victoria’s Secret Catalogue, the company is “constantly critical in creating better quality and better services. That’s where we are. How can we make it better? Better products, and get it there faster.”
“Bringing more products to market has really stimulated the brand. You are going to see a faster pace of change in the catalog. We’re a third of the way there in effectiveness.”
The new Bio line of personal care at the BBW division is “a real opportunity” for repeat purchases, he said, while at White Barn Candle Co., home fragrance is an opportunity to be a market leader. White Barn, he said, is “more than a candle business. It’s clearly an opportunity to lead.”
BBWs’ Pritchard said she expects the Bio line to be a top-ten player in the $10 billion performance hair and face care market. She also that the 1,300-unit, $1.8 billion BBW division will grow non-mall stores by 50 percent over the next three years, with an emphasis on strip centers, will remodel 245 stores, and reap $700 million in sales growth through real estate expansion in the next three years.
“We have a 6 percent share of the $27 billion personal care market. The opportunity is enormous.” Pritchard said.
Two new fragrance categories: botanicals and warm comfort are annualized at a $240 million in sales, from zero at its launch six weeks ago. “Category innovation really does equal growth,” she said.
“Fall is looking very good,” she added. Among the reasons — better training. Recently, the chain summoned all store directors to Orlando, Columbus, Ohio and Los Angeles for three days of outlining goals and product education, to position the company for the fourth quarter.
Even with the slowing economy, she’s upbeat. “Customers look to those small luxuries that she is not willing to give up.”
Two other important growth strategies: the magalog as a driver of traffic to stores and e-commerce.
She defined “white space” as unmet customer needs or aspirations that are areas of opportunities for retailers. Finding those white spaces, is the BBW forte, with the introduction of “individualized product lines” like Bio line, as well as products for tweens under BBW’s Art Stuff label, particularly “fragrances that are bubbly, light and don’t linger. There’s an immediate burst of fragrance. For Tweens, pampering means glitter, shine sparkle.” With tween products, “I believe there is strong opportunity for subbrands.”
She also said the chain’s anti-bacterial group is another opportunity for growth.
Pritchard said filling “the white spaces” in the personal care markets is a huge opportunity, particularly by building the botanical and warm comfort fragrances, which reflect herbal scents, like basil and ginger, and “grandmother’s cooking.”
Previously, BBW’s offerings were all about florals and fruits. With the botanicals and warm comfort products, “These are not just new fragrances. They are new segments,” Pritchard asserted.
“The strength of Bath and Body Works and White Barn is to continually identify white space and then enlarge it.”
At Victoria’s Secret Stores, the big news is the renovation program that will touch most stores, and about 300, or roughly half, dramatically, in eight major markets, with more curved “sensual” fixtures, a paler pink and white palette, black and white fashion photography, foyers with hard wood floors, sconces, chandeliers and more display cases. “Store openings and expansions will add $600 million to the top line in the next several years,” said Nichols, of VS Stores. “We can take the store fleet up to 10,000 or 11,000 square feet as we explore the potential of non-mall locations, relatively high-income locations with smaller populations, like Westport, Conn. These represent real real estate opportunities.
“Right-sizing the fleet means we can add another $230 million in sales. Store productivity actually increases with the size of the store.”
A store in Dadeland Mall in Miami does $6.5 million in annual sales in 4,700 square feet, but with its expansion to 7,300 square feet, this year’s sales will annualize at $11.5 million, she said.
Perhaps the most watched unit will be the 18,000-square-foot store on Broadway by Lincoln Center in Manhattan, which will open in November and put the spotlight on the redesign program.
VS will spend $60 million in remodels and expansions in 2001, and $170 million through 2003; comp sales are seen at 7 percent this year and at least 5 percent next year, according to Nichols.
She said VS is working on “client-touch issues” regarding sales associates, noting, “I don’t think any of you would be raving fans about our sales associates.”

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