Slash-and save

Victoria’s Secret’s announcement that it was slashing catalog circulation 30% signals a change of strategy for the women’s lingerie and apparel marketer. “We’re looking to increase response rates and profitability in our catalog business,” says spokeswoman Monica Mitro.

Mitro, who won’t specify 1998 circulation numbers, says that the company will mail fewer books, “but we’re not taking anyone off the mailing list….Some books will have more pages than in the past. We might combine some editions.” Earlier this year, in fact, Victoria’s Secret discontinued its City catalog of mainstream urban-oriented women’s apparel as part of its reduction in catalog editions. The Country catalog title, which sells casual womenswear, will continue mailing for now.

Enviable numbers Even though Victoria’s Secret has been one of the industry’s most prolific mailers, sending out more than 400 million catalogs in 1997 alone, the catalog is still “one of the most profitable books out there,” says Paine Webber research analyst Richard Jaffe. He estimates its operating margin at 9.5%. “I think few [consumer] catalogers can compare with that.” For instance, he estimates the catalog margin of women’s apparel marketer Talbots to be no higher than 7%.

Victoria’s Secret grew its catalog sales 7% last year, to $734 million; it also, however, hiked its circulation 18%. This year, even with the 30% reduction in circulation, Jaffe still expects the Victoria’s Secret catalog division of $3.99 billion retail conglomerate Intimate Brands to grow revenue 6%, to about $780 million.

Beyond cutting circulation, Jaffe believes the cataloger should refine its merchandising strategy. “Victoria’s Secret’s weakness is on the apparel side, not the intimate apparel side,” he says. “The lack of identity for the apparel side is the main issue. It’s an odd assortment of private-label and brand-name products.”-PM

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