Victoria's Secret & Co. (VSCO)

Victoria’s Secret emerged in the 1970s as a small chain of lingerie stores serving women with styles they could not easily find in department stores. Over the next four decades it became an American icon — synonymous with aspirational femininity, supermodel marketing, and the annual Fashion Show broadcast on television. In 2021, the company separated from L Brands (the conglomerate that owned it alongside Bath and Body Works) and went public as an independent company. It is now a retailer navigating a fundamental rebranding in real time: moving away from the “male-gaze” aesthetic that defined its marketing for decades, toward a more inclusive, modern positioning that appeals to women of multiple ages, body types, and styles.

From lingerie boutique to fashion powerhouse: the early decades

Victoria’s Secret was founded in 1977 by Roy and Gaye Raymond in San Francisco as a response to a specific problem: department stores treated lingerie as a commodity, and the selection was limited and aesthetically dated. The Raymonds created a store that sold upscale, fashionable lingerie in an environment designed to appeal to women, not men. The stores were carpeted and intimate rather than harsh and fluorescent. The catalogs featured women modeling for women rather than for a fantasy audience.

The business was acquired in 1982 by Les Wexner, the founder of The Limited (a large apparel retailer), and it was that acquisition that transformed the company into a retail colossus. Wexner systematized the catalog marketing, expanded the store base across the United States, and, from the 1990s onward, began building the brand into a lifestyle and media phenomenon. The introduction of the Fashion Show in 1995 — a televised event featuring supermodels in high-production-value settings — became a cultural moment. By the 2000s, Victoria’s Secret was the dominant intimate-apparel retailer in North America, commanding roughly 30 percent of the market, and the catalog and broadcast show were iconic cultural properties.

The business model was elegant: Victoria’s Secret designed or sourced apparel (in sizes and styles tailored to its customer base), manufactured it mostly overseas, and sold it through stores (which drove foot traffic and brand exposure) and through catalogs and later e-commerce. The stores were high-rent properties, often in malls and premium shopping centers, and their physical presence was central to the brand and the customer acquisition. Margins were healthy because the markup on apparel — the difference between what it cost to source and what it sold for — was substantial, and the overhead was spread across thousands of stores and millions of customers.

The decline: why fashion and culture shifted

From roughly 2013 onward, Victoria’s Secret faced a series of headwinds that the company did not adequately address until much later. First, the cultural moment shifted. The “supermodel-in-a-bikini” aesthetic that the Fashion Show had commercialized became seen by many customers as exclusionary and outdated. Body-positivity movements and changes in social media consumption meant that the aspirational-lifestyle model that had sustained the brand no longer resonated as powerfully, particularly with younger women.

Second, retail itself was changing. The rise of e-commerce and direct-to-consumer brands meant that customers no longer needed to visit a physical mall to shop for apparel. Smaller, digitally native brands (Aerie, owned by American Eagle; ThirdLove; other upstart lingerie companies) entered the market with different aesthetics, better fits for diverse body types, and lower prices. These brands were also more agile in marketing; they used social media and influencers rather than broadcast television, and they spoke directly to customer concerns (sustainable materials, equitable sizing, inclusivity) that Victoria’s Secret had not prioritized.

Third, mall traffic declined. Victoria’s Secret had built its empire on the assumption that malls would remain the primary shopping destination. But the maturation of e-commerce, the loss of anchor department stores (like Sears and JCPenney) that had driven mall traffic, and COVID-19 lockdowns all eroded that assumption. Stores became less valuable, occupancy costs remained high, and the economics of physical retail deteriorated faster than the company adapted.

The L Brands era and the separation

When Roy Raymond’s original company was sold to Wexner’s Limited, Victoria’s Secret became one asset inside a larger holding company (later rebranded as L Brands). Wexner used the cash flows from Victoria’s Secret to fund other ventures, including Bath and Body Works and a majority stake in La Senza (a Canadian lingerie chain). For decades this was profitable — Victoria’s Secret’s cash was genuinely golden — but by the 2010s, the company’s problems were becoming apparent, and the public market was impatient.

In 2020, Wexner departed the company and a new CEO, John Mehas, began a dramatic repositioning. The company hired more diverse models and marketing teams, discontinued the Fashion Show, stopped photographing only young, conventionally attractive women, and began talking about sizing, fit, and the customer’s comfort rather than fantasy. The physical stores were reduced in number (closing unprofitable locations), and e-commerce was elevated. In 2021, Victoria’s Secret separated from L Brands and went public under the ticker VSCO.

The present business structure and the growth question

As an independent company, Victoria’s Secret operates roughly 750 stores across the United States, Canada, and some European markets, plus a significant e-commerce business. The company is much smaller by headcount and store count than it was at its peak (there were roughly 1,500 stores in North America in the 2000s), but the stores that remain are higher-productivity locations. Revenue is split between apparel (bras, panties, loungewear, sleepwear) and beauty and fragrance (perfumes, body care products, accessories).

The repositioning is incomplete and contested internally, as is typical when a legacy brand tries to reinvent itself. Financially, the challenge is stark: Victoria’s Secret must grow e-commerce faster than the store base shrinks, maintain margin discipline as it moves away from the premium positioning, and prove that the new, inclusive aesthetic resonates with enough customers to sustain profitability. The company is no longer a growth story in the way it was in the 1990s and 2000s. It is a rationalization story: can management shrink the store base, improve operations, and stabilize the brand at a smaller, healthier scale?

Reading the business in the filings

Victoria’s Secret’s 10-K (SEC CIK 0001856437) breaks revenue by segment (apparel versus beauty/fragrance) and by channel (stores versus e-commerce). Watch the comparable-store sales (growth in stores that were open in both periods) as a measure of whether the brand repositioning is working. Track the store count and the square footage trends; they should be declining in line with a deliberate strategy to close underperforming locations. E-commerce as a percentage of total revenue should be rising; if it is not, that signals the company is failing to convert customers online.

Gross margins are crucial: can the company maintain healthy markups as it reprices away from premium positioning and competes with more price-aggressive rivals? The selling, general, and administrative expense ratio reveals how efficiently the company is operating; the goal should be to shrink this ratio as store overhead declines and e-commerce leverage improves.

Inventory is a fraught metric in apparel retail: too much inventory left over at the end of a season forces discounting, which destroys margins. Too little means lost sales. Victoria’s Secret’s ability to manage the seasonal buy in a market that is no longer guaranteed to accept the company’s design choices is a key operational challenge.

Victoria’s Secret is an example of a once-dominant brand facing fundamental shifts in culture, retail, and competition. Its separation and repositioning are necessary, but the outcome is uncertain. The company retains some advantages — brand awareness, store real estate in good locations, e-commerce infrastructure — but must prove that those assets are valuable in a market that has moved on.