The 81 Year Old Boss Doesn'T Understand Young People When He Loses The Market.

The biggest worry for the apparel industry is that they do not understand young people's preferences.

Once the sexy conquest of consumers has fallen to the bottom, after several innovations, performance has not improved, and it has to start looking for reasons for itself.

According to Dow Jones quoted sources, the New York hedge fund Barington Capital Group LP, which owns less than 1% stake in L Brands of the parent company, challenged the 81 year old L Brands founder, chairman and chief executive officer Leslie Wexner, urging the group to add more women and young directors, and called on the L to consider splitting.

The question is also full of "gunpowder". Barington Capital CEO James A. Mitarotonda wrote in a letter to Leslie Wexner, "the current board is not sure whether it is independent, so as to effectively monitor your position as CEO."

Analysts said that although the company tried to maintain its sexy and youthful vitality, the industry saw the company's "old age management crisis".

At present, Leslie Wexner is still the largest individual shareholder of L Brands, holding 17% of the shares.

The board of directors of the group has 12 members for a term of 20 years, with an average age of 71 years, and the wife of Leslie Wexner is also in Abigail.

According to the provisions of the New York stock exchange, the business consultants of Abigail and Leslie Wexners are not independent directors. In the view of Barington Capital, the other 8 independent directors of the group are closely related to Leslie Wexner. One of them is a University sponsored by Leslie Wexner, with a sponsorship of $100 million, and another charity has a partnership with Abigail, and a retail companies who has worked in Leslie.

Some people pointed out that the board of directors of L Brands was very old-fashioned. Such a huge nepotism existed only many years ago. Now it is out of date.

John Roe, head of ISS Analytics, shareholder data intelligence department, said that over 1/3 of directors of L Brands have been in service for more than 9 years. Their unwillingness to listen to new ideas and attitudes will be the biggest potential crisis for the group.

In last year's report, L Brands stressed that the 8 directors were indeed independent because they had not worked for the group in the past few years and had nothing to do with senior executives. They had not received more than 120 thousand dollars in the past three years.

Up to now, Leslie Wexner and other L Brands board members have not responded to relevant events.

Another person familiar with the matter said that L Brands will review the relationship between board members and hire headhunting companies to find three new board candidates, and will replace some directors at the shareholders' meeting in May.

It is easy to see that although the CEO of Leslie has been changing, the Leslie Wexner is the real controller behind it.

He founded Bath&Body Works in a store in Columbo, Ohio, USA in 1963, and founded the The Limited group in 1982, after acquiring $1 million, that is, the predecessor of L Brands.

In the commercialized operation of Leslie Wexner, the company began to expand rapidly in 80s, and the product line was extended to shoes, evening dress and perfume. At that time, the valuation rose to $500 million, which was 100 times that of the owner.

However, the real popularity of the whole world was in 1995.

In order to be able to reach more consumers, Wei first launched the annual show that affected the whole underwear industry.

Since the beginning of the first "secret show", this attraction attracted countless male consumers' headlines year after year.

The turning point occurred in 2016. With the change of female consumers' aesthetics and ideas, and the brand of underwear that is the main body of "natural beauty" springing up, the sale of "sexy" Wei suddenly lost its momentum, and its performance also lost its growth momentum.

Aware of the crisis, Wei tried to save the lost market share by hiring new leaders and changing the product structure, but it turned out that the decision to cut $500 million in swimwear and continue to believe that the brand's 70 year old marketing director Edward Razek's decision was wrong.

Last year's ratings show continued to decline. The total number of viewers dropped to 3 million 270 thousand, of which the audience rating of viewers aged 18 to 49 was only 0.9, while Edward Razek's remarks in the interview after the show made the moment fall to the bottom.

He admits to the editor of Vogue that brands are not interested in big codes or denatured models.

After the news, not only has aroused widespread consumer opinion, but also seen as one of the biggest competitors in the world, Heidi Zak, the founder of the Internet underwear brand ThirdLove, has released an open letter to the New York Times.

Hedi Zak wrote in the letter that "Wei" may still live in "fantasy", and that women in reality need not only sports and work, but also breastfeeding and nurture the next generation. Taking care of their husbands and parents and blindly conveying the concept of "sexy king" to female consumers is meaningless.

Robyn Lawley, the Australian model, proposed a fashion show to boycott the "narrow aesthetic" on the petition website, and launched the topic of "#WeAreAllAngels" on social media such as Instagram.

With the diminishing marginal effect of "sexy", the commercial value of the secret brand is on the verge of bankruptcy.

And the brand image collapses and there are achievements.

After sales of $7 billion 780 million in fiscal year 2016, revenues in the 2017 fiscal year slumped 9% to $7 billion 300 million. Last year's performance also showed no improvement. In the fourth quarter of the 2018 fiscal year ended February 3rd, sales in the four quarter of the year fell from 5.1% to 2 billion 531 million dollars from 2 billion 668 million dollars in the same period last year. The same store sales declined, and the annual revenue decreased to US dollars.

At the same time, Bath and Body Works has become the main driving force for the performance of L Brands group. In the fourth quarter of 2018, sales rose 8.9% to 1 billion 950 million US dollars in the same period, while same store sales increased 12%. The annual revenue growth was 11.6% to 4 billion 631 million US dollars.

Some analysts believe that the current situation of L Brands is very similar to that of Gap group. After announcing that the Old Navy would be separately split this month, the share price rose 25% after that day, and L Brands would become the next fashion retailer to spin off its business.

In response, L Brands responded that the group had focused on providing goods that conformed to consumption trends, while strictly controlling the portfolio and cost of real estate. After consulting with financial advisers, it would focus resources on core areas in the future to enhance performance and speed up growth.

On Wednesday, the official launch of the swimsuit product was officially launched in the official website. Everything seems to be back to its original point.

Just like two years ago, L Brands tried to win more time by replacing its leaders. At the end of last year, the heavy lifting of the recovery was handed over to Tory Mehas's John Mehas Burch.

Similarly, Leslie Wexner has high hopes for John Mehas, hoping that he can lead the company to a new stage and become the preferred lingerie brand for women consumers.

John Mehas said that after its accession, its primary task is to improve the underwear business and Pink series, and it will also strengthen the optimization of product marketing, brand positioning, internal talents and the cost structure of store investment portfolio.

Nomura Nomura Securities retail analyst Simeon Siegel believes that John Mehas needs to accurately judge who the next generation of consumers is, their needs and the most acceptable way of communication. "A brand with an annual income of nearly $3 billion has recorded a loss, which is unreasonable. The new CEO must be very good at controlling costs."

Nevertheless, it is still a leader in the underwear industry, occupying about 2/3 of the market, and sold more than 3 billion dollars of underwear last year.

Romain Liot, chief operating officer of lingerie brand Adore Me, admits, "we are nothing compared to Wei. They sell as much as we sell every year.

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Simeon Siegel also said that it has been challenging in recent years, but consumers can not deny that the brand is still the highest income underwear brand in the world.

A positive sign is that in recent two years, with the help of the trend of fitness, Wei Ming has created a new topic by publicizing the lifestyle of maintaining a healthy body with supermodels.

In the face of increasingly fierce market competition, the 42 year old is already full of troubles. It is no easy task to reverse the current decline, but L Brands has not abandoned its support for Wei.

In November last year, the group announced that it would halve interest on shareholders and save 325 million dollars for debt repayment, and plans to close another 53 stores this year.

20 years ago, the traditional business model of the world was worried, but now the millennials are more concerned with gender identity, diversity, environmentalism, feminism and other hot topics than "sexy", which are clearly beyond the scope of Leslie Wexner and other senior board members.

L Brands shares rose 1.23% to $27.89 on Friday after the news of the re emergence of swimsuit business and the upcoming exchange of the board of directors, but the stock price has fallen by 60% compared with the peak of 2015, and the market value is now about 7 billion 600 million dollars.

Author: Zhou Huining