NEW YORK, United States — A Wall Street Journal report that longtime L Brands CEO Les Wexner is in talks to step down has reignited speculation about the future of Victoria's Secret, the ailing lingerie giant he has controlled for nearly four decades.

Wexner bought Victoria's Secret in 1982 and grew it into a stalwart of the American mall and a globally beloved brand. The chain forms the core of L Brands, along with Bath & Body Works, but has struggled to adapt to changing consumer preferences. Rivals such as American Eagle's Aerie have stolen market share with a message of body positivity, while Victoria's Secret under Wexner had until recently clung to the hypersexualised image that brought the brand so much success in the 1990s and 2000s.

L Brands shares have dropped more than 75 percent since 2015. They were up 13 percent Wednesday after news broke of the potential sale. The company declined to comment.

The reports of Wexner's potential departure revived speculation that L Brands would spin off or sell Victoria's Secret. Analysts say new ownership could pull the brand out of its downward spiral and reclaim some of the market share lost to Aerie, Rihanna's Savage X Fenty and other upstarts. Even after years of declining sales and a string of controversies, Victoria's Secret logged $4.5 billion in revenue in the first three quarters of 2019, far ahead of its closest competitors.

“Victoria’s Secret can’t ever get back to its glory days, but that doesn’t mean someone can’t come in, buy the brand cheap and make money,” said David Tawil, president of Maglan Capital, a hedge fund that focuses on distressed assets.

A turnaround won't be easy; it will require a complete identity shift, including a 180-degree turn in its marketing strategy, as well as reducing its dependence on malls and an investment in customer service, industry sources say.

Private equity firm Sycamore Partners is already rumoured to be in talks with L Brands to acquire a stake in Victoria's Secret, according to the Journal report Wednesday. Strategic acquirers are a possibility too, Tawil said, pointing to Hanesbrands Inc., VF Corp. and the Berkshire Hathaway-owned Fruit of the Loom, all of which could see savings by combining their supply chains with Victoria's Secret's.

Wexner's exit alone would mark a significant pivot for L Brands. Under him, Victoria's Secret defined what sexiness looked like in America for decades. But in the #MeToo era, that image seems out-of-step to many consumers. Furthermore, Wexner has been scrutinised for his association with disgraced wealth manager Jeffrey Epstein, who was awaiting trial for sex-trafficking charges before he died in prison.

“In short, [Wexner] is toxic, so best to get rid of him,” said Tawil.

Marketing makeover

For decades, the lingerie brand dominated the market by using provocative campaigns with scantily clad models to sell sex to consumers. Millions of viewers tuned into the annual Victoria's Secret runway show until it was cancelled last year, after a steep decline in ratings.

Where rivals won customers with a body-positive message, Victoria's Secret doubled down on its "Angels" — a winged squadron of sample-size models who embody the brand's sexy image. Just days before what would be its last televised runway show in the fall of 2018, Creative Director Ed Razek made disparaging comments to American Vogue about trans and plus-size models. He left the company in August.

New management and ownership will be an opportunity for Victoria’s Secret to truly change its narrative, said Gartner Specialist Ben Romero, who follows L Brands and other retail companies. Victoria’s Secret already has a prodigious following on Instagram and other social media platforms; what’s left is creating a massive campaign that celebrates all body types and self-acceptance, such as Aerie’s “Real” ad series, which features models with disabilities and medical conditions.

But Victoria’s Secret must be careful about the tone of its marketing, Romero warned. “It always has to make sense for the DNA of the brand … [If not,] these choices will feel too little, too late,” he said.

Cues from DTC competitors

Some of Victoria's Secret's biggest competitors today are tiny upstarts relative to the global lingerie giant. Still, these smaller brands are upstaging Victoria's Secret in many elements of retail, including customer service and fit technology. ThirdLove, for instance, touts a 60-day fit guarantee.

Victoria’s Secret should use its superior size and marketing clout to its advantage and copy some of these tactics, Romero said, including sending out personalised emails, focusing on the fit and comfort of garments, and consider offering a subscription service, such as MeUndie’s monthly membership where shoppers receive a new pair of underwear every month at a lower price than one-off purchases.

Refocus on Pink

Victoria’s Secret launched its Pink line in 2004, targeting teens and preteens. The vertical now makes up 40 percent of all Victoria Secret sales, according to Wells Fargo analyst Ike Boruchow.

Pink “represented a success story at [Victoria’s Secret,] as it was routinely called out as outperforming,” he wrote in a note Wednesday. It only began to struggle recently, which means recovery for the line could go more smoothly than it would for the core VS brand.

In August, Victoria's Secret hired its first trans model, Valentina Sampaio, for a Pink campaign and new TikTok campaign for the teen brand indicates that it's focusing more on health and fitness in 2020.

Better use of stores

Victoria’s Secret has 1,143 stores worldwide, according to its website. Given its lacklustre sales, there is ample opportunity to evaluate its footprint and close unprofitable stores, Tawil said.

Victoria’s Secret should also consider using its stores as distribution centres and offer more omnichannel capabilities, such as click-and-collect, Romero said. These stores could also be used to host events to create community among shoppers, he added. “Look at how Ulta offers makeovers and stylist consultation in their stores — it’s about creating a place that customers can go to for experiences,” he said.

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