Victoria reveals her secrets

Victoria’s Secret catalog president/CEO Cindy Fields has helped to nearly double the company’s catalog sales, from $436 million in 1993 to $760 million in ’98. But despite the apparel marketer’s rapid expansion, Fields insists it “has much more potential” for even greater growth; in fact, her goal is $1 billion in annual catalog sales by 2004.

Paradoxically, as part of its growth plans, last August the catalog reduced its circulation for the first time ever, mailing 30% fewer catalogs for the second half of ’98 than originally planned (see “Slash-and save,” December 1998 issue). By discontinuingits City apparel book and mailing fewer editions of its core lingerie/apparel catalog, Victoria’s Secret was able to add pages to its highly productive core book and still cut production and mailing costs 10%. To further hone its circulation strategy, late last year the company hired Fred Burns away from database consultancy Kestnbaum & Co. to serve as director of database marketing.

The changes have boosted response and increased sales per page more than 10%, Fields claims. So while the catalog division had expected a 10% sales decline following the slash in circulation, revenue for the fourth quarter actually fell only 9%. More important, the catalog expects to report a fourth-quarter operating margin well ahead of last year’s.

For ’99 and beyond, “an increase in our average order size is our goal,” Fields says-key for meeting its $1 billion sales goal.

Merchandising and advertising Sharper circulation management isn’t the only secret behind the improved margin. The cataloger is refining its merchandising mix too-increasing its line of bras, for instance. The profit margins of bras are 3-5 percentage points higher than those of other lingerie items, according to Fields, and they have fewer returns than other clothing items. What’s more, bras “are absolutely what Victoria’s Secret is best known for,” says Fields, who hopes to double the bra sales over the next five years.

“We have a huge opportunity to capture the ‘everyday bra’ business,” Fields says. “For instance, you’d be hard-pressed to find wireless bras in our catalog or our stores. So we have opportunities to expand into the no-wire bra business.”

The company’s two-year-old ad program closely aligning the catalog with the retail chain is boosting catalog sales-or at least the catalog’s profile-as well. Not only do most of the TV commercials post the catalog’s 800-number, but they also show models in the same poses used on the catalog covers. “It was obvious and fundamental, but we weren’t doing it before,” Fields says.

While Richard Jaffee, research analyst with New York-based Paine Webber, says “you can’t quantify” the results of the ad campaign on catalog sales, “the recognition rate is enormously high. You almost have to think of the stores and the catalog as one entity, something other retail/catalogers don’t do as effectively. And the dollars flow both ways. The catalog generates store traffic,” while the stores help to promote the catalog.

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