California Apparel News

Frederick’s of Hollywood has been on a diet.

Linda LoRe, the 49-year-old head of Frederick’s of Hollywood Inc., spent months making the legendary lingerie company leaner and meaner to emerge from bankruptcy protection early this year.

That meant paring down the company’s lineup of mall-based stores by about 25 percent, whittling the company’s debt from a sizeable $67 million to $26 million on annual revenues of $200 million, and relocating some of the mall stores to better locations.

The result: Same-store sales are up 3 percent this year over last year, at a time when many other stores are struggling to show any increase at all.

But the workaholic LoRe, who has also been on a diet to shed 20 pounds from her 5-foot-6-inch frame, isn’t stopping there. Now that her bankruptcy woes are behind her, she and her team are introducing the lingerie world to the Xtreme Bra. The super undergarment creates cleavage “faster than a speeding bullet,” joked LoRe, reciting the marketing mantra developed for the company’s newest product. The Xtreme Bra will hit store shelves shortly after Labor Day.

“It gives you more support than your best friend,” she said.

Then there is the Frederick’s of Hollywood fragrance that the company will launch in November. And, if LoRe has her way, Frederick’s will be booking passage to China sometime in the future. She hopes to create an international division to take advantage of the company’s biggest asset: a five-decadesold brand name that is synonymous with Tinseltown starlets, sultry lingerie and sexy California evenings.

LoRe has been communicating with the Embry Group, one of China’s largest lingerie manufacturers, about the possibility of licensing the brand in the world’s biggest consumer market. The two companies have not yet set a date for this to happen.

“Right now we’re just e-mailing each other—we have to make sure that the company we hook up with is on the same page as we are in regards to the image we portray,” LoRe said inside her low-key office, whose cinderblock walls are painted off-white—a change from the drab gray that was there when she arrived.

LoRe has one of the few offices with a window in the company’s Hollywood headquarters. If you lean over her small, round conference table, you get a narrow view of Hollywood Boulevard and its denizens of tourists, teenagers and tarnished habitueacute;s.

Frederick’s corporate hub, at 6608 Hollywood Blvd., sits atop the company’s flagship store, whose sun-faded pink awnings are a not-too-subtle sign the place has not been renovated in nearly 20 years.

But that may soon change as the company renovates its image and shies away from the old perception that Frederick’s lingerie is only a salacious selection of crotchless panties and harem outfits. Those still exist in the back of the stores. But company executives have been trying to spin a more wholesome aura that will appeal to the 20-something consumer who wants something flirty.

Updating the Frederick’s image

Yolanda Dunbar, the company’s vice president of marketing, likes to think of Frederick’s as the “anti-establishment” lingerie company—a switch from the 500-pound gorilla known as Victoria’s Secret, the largest subsidiary of Columbus, Ohio–based Limited Brands Inc. In 2002, Victoria’s Secret posted $3.6 billion in sales and operated 1,000 stores.

“We are being asked to participate in fashion shoots now and are picked up for editorial credits in magazines such as Marie Claire, Cosmo and Vogue,” Dunbar noted.

Still, Frederick’s will always be a little more risqueacute; than the big V, which has ushered in America’s acceptance of the average woman splurging on frilly, sexy lingerie. Such acceptance made the women’s intimate-apparel industry an $8 billion business in the United States last year.

“We may be fun, flirty and fearless, but we are also sexy and provocative,” LoRe noted.

That’s where the Xtreme Bra comes in. Retailing at $28, it creates maximum cleavage using a removable push-up “bump” pad. The company’s engineering design team, headed by Toni Mandel, created the bra.

“I felt the marketplace needed something new and different,” Mandel said, explaining why her team came up with the cleavage bra. “It’s stale out there.”

Frederick’s hopes the bra, manufactured in Montreal by Montelle Intimates Inc., will give the company the same lift as the Water Bra did. The embroidered Water Bra still ranks high—it is the company’s No. 2 seller after the Smooth Sensation bra, which has a deep-plunge center and removable push-up pads. The company projects the Xtreme Bra will bring sales of $1 million its first year.

On the retail front, LoRe will be sprucing up some of Frederick’s shabbier mall stores. It will cost $200,000 for each complete store renovation, which will include the addition of new leopard-print carpeting, fixtures and red velvet curtains. Other stores will get touchups ranging in price from $10,000 to $100,000.

Frederick’s executives are also hoping to revamp the tired-looking flagship on Hollywood Boulevard with a $1 million capital infusion. Artist renderings of what the new store interior would look like sit in the windowless conference room in the headquarters’ basement. Everyone is waiting for a green light.

The only thing stopping the project is uncertainty over whether the building’s lease, which expires at the end of 2005, will be renewed. Although there is an option to renew the flagship’s lease, the rest of the building’s lease has to be renegotiated, which could change plans.

Still, the company intends to build a lingerie museum somewhere, preferably inside the main store, to showcase the collection it has accumulated since Fred Mellinger founded Frederick’s in 1946.

“We have things that are in vaults,” LoRe said. “We have things that are part of the lingerie revolution, from the smallest bra to the biggest bra. From black lingerie [introduced to the U.S. market by Frederick’s in 1946] to the lingerie worn by [comedian] Flip Wilson when he played Geraldine.”

New players in the field

But success is tricky when competition is lurking around every clothing rack. Victoria’s Secret keeps marching along, opening stores right and left. Two years ago, Sara Lee Corp. launched a new lingerie chain called Inner Self. The Chicago company, which is the largest U.S. underwear maker, is targeting the 25- to 55-year-old woman with the spalike environment of its stores, where ceilingto- floor waterfalls and soft music create a comfortable atmosphere. Sara Lee currently has eight Inner Self stores and plans to open three more this year. Elizabeth Faullin, a spokeswoman for Sara Lee Branded Apparel, said the company has not disclosed how many stores it will open in 2004.

What Frederick’s has to do is capitalize on its name and history, according to industry analysts.

“The company has a strong brand name going for it,” said Jeffrey Klinefelter, an analyst at U.S. Bancorp Piper Jaffray Inc. who tracks the Limited Brands’ financial progress.

“There are not that many intimate-apparel brands that have that kind of name,” said Christopher Kim, a research associate at J.P. Morgan Chase & Co. who charts the ups and downs of Victoria’s Secret.

That is why LoRe is marketing a fragrance under the Frederick’s of Hollywood name and exploring the Chinese market.

“In China, American brands seem to be extremely important,” said Larry Sass, senior vice president of business development at Cherokee Inc., the Van Nuys, Calif.–based company that licenses labels such as Cherokee, Sideout and Carole Little.

LoRe leading the way

If anyone can resurrect Frederick’s of Hollywood, it is LoRe.

The dynamic leader grew up in Anaheim, Calif., and was the oldest of eight children. After dropping out of California State University, Long Beach, she started her career as a fragrance buyer at Robinson’s department stores. Her big break came when she was looking for new fragrances for the department- store chain and discovered Giorgio, a relatively unknown brand that was sold by a small boutique called Giorgio Beverly Hills.

LoRe brought the fragrance exclusively to the retailer, and the decision changed her life. In 1990, she became chief executive and president of Giorgio Beverly Hills. She left after seven years to develop a nonprofit entrepreneurial academy for disadvantaged youth.

In 1999, LoRe became Frederick’s chief executive. Six months later, Wilshire Partners, an investment firm in Orange County that had bought the company, quickly placed it in Chapter 11.

But that made LoRe work even harder.

“She has a passion for the business— she really wants it to be successful,” said Fred Hayman, the nowretired founder of Giorgio Beverly Hills. “She gave us a presence when she was there.”

Now Frederick’s is primarily owned by a group of investors led by French-based Creacute;dit Agricole Indosuez, and LoRe feels ready to take on the world—starting with China.