Rebranded Lingerie Company Finds Average Woman a Poor Fit

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Editor’s Note:

This story appears in the Aug. 18 print edition.


In an attempt to move away from its sex kitten image, Frederick’s of Hollywood started marketing its lingerie line to the average woman. That was two years ago, and it now looks as if the intimate apparel retailer’s rebranding has fallen flat.

The Los Angeles-based company dived to a 52-week low of 87 cents per share on Aug. 7. The stock is about 80 percent lower than a year ago. In June, Frederick’s posted a third quarter net loss of $2 million, compared with net income of $1.1 million the same quarter one year ago.

Decreasing mall traffic and reduced consumer spending, coupled with increased competition in the intimate apparel market, have hindered the company’s effort to broaden its consumer appeal.

“There is Victoria’s Secret, and so many other stores doing lingerie now: from Chico’s to American Eagle and Abercrombie & Fitch,” said Roseanne Morrison, fashion director of New York-based retail and fashion industry analysts Doneger Group. “There is more competition, and that is what hurt.”

Also, she said, Frederick’s failed to market itself to the new consumer it was trying to reach.

Executives from Frederick’s couldn’t be reached for comment.

Increased competition has come from high-end women’s apparel brands, such as Juicy Couture and Ed Hardy, which have recently added intimate apparel lines that are sold in trendy boutiques and department stores.

And some companies are upping the ante by offering celebrity-driven collections, including Miami-based lingerie manufacturer Cosabella. The family-owned company debuted a “Sex and the City”-inspired line in May, which is sold in high-end department store Neiman Marcus.

Next month, push-up brassiere staple Wonderbra, which is owned by Hanesbrands Inc., will be offering vintage-style lingerie designed by burlesque star Dita Von Teese.

California Fashion Association executive director Ilse Metchek said Frederick’s still remains the most recognized brand behind Victoria’s Secret.

“I think they have an opportunity with those who didn’t know the original brand. Generation X and Yers have no recollection of what Frederick’s was,” Metchek said.

In January, the company completed its merger with New York-based Movie Star Inc., a design, marketing and distribution house. Its intimate apparel collections hearken back to Frederick’s sexier days.

Following the merger, which created Frederick’s of Hollywood Group Inc., Frederick’s executives said they planned to open or renovate 40 to 50 of the company’s stores and focus on expanding its online presence.

But company executives cited an unsuccessful transition to a new Web site platform as a contributing factor in declining Internet sales.

“If you revamp your Web site, you are still getting the same customers,” said Morrison of Doneger Group. Instead, she said, Frederick’s needs to partner with online shopping Web sites, such as Shopbop.com or Bluefly.com, to boost exposure.

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